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What are Direct & Indirect Taxes?
Posted on: 13/Feb/2014 4:13:21 PM
Direct Tax - The income tax paid by individuals and companies (Corporate Income Tax, Personal Income Tax), and Property tax.
Direct Tax is no transferable. It will be paid according to the earnings. It will depend on the paying ability of the individual.
Indirect Tax - The excise Duty paid for manufacture of different products, Customs Duty paid for Imports & Exports, Additional Tax on purchase of items, and Service Tax.
Indirect Taxes are transferable – the tax to be paid by one may be borne by another. For example, when food or cosmetic items are bought, the taxes to be paid are passed over to the buyer from the manufacturer and the wholesale/retail seller. These taxes are added on to the price of the items, for example, petrol or hotel bills.
Direct Taxes are the source for economic betterment. Indirect taxes are paid by all income groups. In India, 35% of the tax revenues is through direct Taxes. 65% is from indirect taxes.
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