Consider the following statements:
Statement 1:
India follows a progressive income tax regime.
Statement 2:
In this tax regime, tax is levied at increasing rates to increasing brackets of income and revenue; thereby reducing the burden on low-income classes of the population.
Which one of the following is correct in respect of the above statements?
1
Both Statement 1 and Statement 2 are correct and Statement 2 is the correct explanation for Statement 1.
2
Both Statement 1 and Statement 2 are correct but Statement 2 is not the correct explanation for Statement 1.
3
Statement 1 is correct but Statement 2 is not correct.
4
Statement 1 is not correct but Statement 2 is correct.