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Question : 9
Total: 18
Distinguish between direct taxes and indirect taxes. Give an example of each.
Solution:
Difference between direct and indirect taxes:
| Direct Tax | Indirect Tax |
|---|---|
| (i) When liability of paying a tax and the burden of that tax fall on the same person, the tax is called a direct tax. | When liability of paying tax is on one person but the burden of that tax falls on other person. The tax is called an indirect tax. |
| (ii) The burden of direct tax cannot be shifted on to the others. | The burden of indirect tax can be shifted on to the others. |
| (iii) Examples are-income tax, corporate tax, gift tax, etc. | Examples are-sales tax, custom duty, service tax, etc. |
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