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Question : 20
Total: 52
With suitable examples, distinguish between Direct taxes and Indirect taxes.
Solution:
| Basis ofDifference | Direct Tax | Indirect Tax |
|---|---|---|
| Meaning | It is paid by one on whom it is legally imposed. Burden of tax falls on the same person on whom the tax is imposed. | The liability to pay this type of tax is on one but he wholly or partially shifts the burden of tax onto another person |
| Nature | It is progressive in nature i.e. Real burden is more on rich and less on poor. | It is regressive in nature i.e. Real burden is more on poor and less on rich. |
| Imposition | It is imposed on income, wealth and profits. | It is imposed on goods and services. |
| Examples | Income tax, Wealth Tax, Gift Tax, Corporate Profit Tax. | Goods and Services Tax (GST). |
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