ICSE Class X Economics 2019 Solved Papers
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Question : 35
Total: 40
Give three differences between direct taxes and indirect taxes.
Solution:
Five differences between a direct tax and an indirect tax :
Direct Tax | Indirect Tax |
---|---|
1. They are directly paid to the government by the people on whom they are imposed. | They are paid to the government by one person but their burden is borne by another person. |
2. They cannot be shifted i.e. impact and incidence is on the same person. | They can be shifted i.e. impact is on one person and incidence is on an another person. |
3. Taxes imposed on production or income are direct taxes. | Taxes imposed on consumption are indirect taxes. |
4. It is progressive because the tax rate increases with an increase in income. | It is regressive because the common people bear this tax. |
5. They generate social consciousness among people. Examples: Income Tax, Wealth tax. | They do not generate social consciousness as they are taxes in the dark. Examples: Sales Tax, Excise Duty. |
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