Key Points
Key Points: Indirect Tax
- An indirect tax is charged on goods and services, not directly on income.
- It is paid when a product or service is produced, sold or purchased (e.g. GST in India).
- Producers and sellers can shift the burden to consumers through higher prices, so the person who pays it to the government is not the one who finally bears it.
Key Points: Direct Tax
- A direct tax is paid directly on a person’s income or property, and its burden cannot be shifted to someone else (e.g. income tax, wealth tax).
- Proportionate tax: Same fixed rate on all income levels.
- Progressive tax: Tax rate increases as income increases.
- Regressive tax: Rich pay a smaller proportion of their income than the poor.
Concepts [4]
- Principle of Taxation
- Types of Taxes
- Importance of Tax
- Need for Tax and Peoples Welfare
