The Correct Answer is Both a and b. Explanation & Key Takeaways: • The ability-to-pay philosophy of taxation maintains that taxes should be levied according to a taxpayer's ability to pay. • The idea is that people, businesses, and corporations with higher incomes can and should pay more in taxes. • The Income Tax is based on the principle of 'ability to pay'. Hence a is Correct. • Black money is neither reported to the public authorities at the time of its generation nor disclosed at any point of time during its possession. • Black money may be generated either by illegitimately drug trade, terrorism, corruption, or legitimate failure to pay the dues to the public exchequer yielding the generation of unaccounted wealth. • When the Income Tax rate is higher people tend to evade the tax. Hence b is also correct.