Question

Briefly explain any two merits of direct taxes.

Answer 1

(i)

Equitable :

A direct tax is an equitable tax as it is levied according to the tax paying capacity of the people. Under a progressive taxation system, the tax rate increase as the income increases.
(ii)

Economical:

Direct taxes are economical in the sense that the cost of collecting them is low. They are usually collected ‘at the source’.