ICSE Class X Economics 2019 Solved Papers

© examsnet.com
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.
© examsnet.com
Go to Question: