The sales tax you pay while purchasing a toothpaste is a

A) tax imposed by the Central Government
B) tax imposed by the Central Government but collected by the State Government
C) tax imposed by the State Government but collected by the Central Government
D) tax imposed and collected by the State Government

Answer [D]

Explanation – A sales tax is a consumption tax imposed and collected by the state government on the sale of goods and services. A conventional sales tax is levied at the point of sale, collected by the retailer and passed on to the government.Retailer is simply collecting the tax as part of their agreement to do business in that city or state. From time to time the retailer will have to prepare forms and pay in the money they collected for taxes to the state or local government. State and local government generate revenue from it. Every time we go to shopping, we are paying this tax. Buying toothpaste, paper towels, soda, clothing etc includes this tax only.