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Question
What are the types of tax? Give examples.
Long Answer
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Solution
Taxes are of various types and are generally classified into two main categories:
- Direct Tax: A direct tax is a tax that an individual or organisation directly pays to the government. It is based on income, wealth, or property and cannot be transferred to others.
For Example: Income tax, Wealth Tax, Corporate Tax, etc. - Indirect Tax: An indirect tax is a tax that is collected by an intermediary (like a shopkeeper) from the consumer and then paid to the government. It is included in the price of goods or services, so it can be passed on to others.
For Example: Goods and Services Tax, Value Added Tax, etc.
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