With suitable examples, distinguish between Direct taxes and Indirect taxes. - Economics

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Distinguish Between

With suitable examples, distinguish between Direct taxes and Indirect taxes.

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Solution

Basis of Difference Direct Tax Indirect Tax
Meaning The burden of the tax falls on the same person who the tax is lawfully imposed, and who pays it. This kind of tax is the responsibility of one individual, but he transfers all or part of the tax liability to another.
Nature It has a progressive aspect, meaning that the real burden falls more heavily on the rich than the poor. Since the real burden falls more on the poor and less on the rich, it is regressive in nature.
Imposition It is imposed on income, wealth, and profits. It is imposed on goods and services.
Examples Income tax, Wealth Tax, Gift Tax, Corporate Profit Tax. Goods and Services Tax (GST)
Concept: Direct and Indirect Tax
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2022-2023 (March) Outside Delhi Set 1
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