Distinguish between direct tax and indirect tax class 12

Direct Tax Indirect Tax (a) A direct tax is paid by a person on whom it is legally imposed. It cannot be transferred. (a) Indirect tax is imposed on one person, but paid by the other. (b) e.g. Income Tax, Wealth Tax, etc. (b) Sales tax, excise duty, service tax are examples of indirect tax. (c) Impact and incidence are on the same person i.e., the tax payer is also tax bearer. Tax burden cannot be shifted. (c) The impact and incidence may be on different persons i.e., there is a shifting of the tax burden. (d) Direct tax is either on the person's income, wealth or property. (d) Indirect tax is on commodities and services. (e) This tax is paid at the time of earning income. (e) This tax is paid at the time of spending income.

Direct Tax Indirect Tax Direct tax is imposed directly on the taxpayer and ispaid by the taxpayer directly to the government. Theincidence and impact of the tax is on the same person. Indirect tax is tax collected by intermediaries (e.g.retailers) from the ultimate taxpayer i.e. consumers. The incidence and impact of the tax is on different persons. Its burden cannot be transferred to other person . Its burden can be shifted from one person to other. e.g.manufacture shifts the burden of tax to retailers who inturn shift it to consumers. It doesn't affect the prices. Indirect tax may affect prices, as generally, consumerspay high prices which are inclusive of taxes. For example, Income tax, property tax etc. For example, VAT, customs duty etc. Categories • • (31.9k) • (8.8k) • (764k) • (248k) • (2.9k) • (5.2k) • (664) • (121k) • (72.1k) • (21.7k) • (26.9k) • (17.7k) • (1.8k) • (3.8k) • (19.6k) • (1.4k) • (14.2k) • (12.5k) • (9.3k) • (7.7k) • (3.9k) • (6.7k) • (63.8k) • (26.6k) • (23.7k) • (14.6k) • (25.7k) • (530) • (84) • (766) • (49.1k) • (63.8k) • (1.8k) • (59.3k) • (24.5k)

Distinction between Direct Tax and Indirect Tax: Basis of Classification. The basis of classifying taxes into direct tax and indirect tax is whether the burden of the tax is shiftable to other or not. If it is not shiftable, it is a direct tax. If burden is shiftable to others, it is an indirect tax. (i) Direct tax. When (i) liability to pay a tax, and (ii) the burden of that tax falls on the same person, the tax is called a direct tax. Thus a direct tax is the tax which is paid by the same person on whom it has been levied, i.e., its burden cannot be shifted to others. For example (i) income tax is a direct tax because the person whose income is taxed is liable to pay the tax directly to the government and bear its burden himself. Other examples of direct tax are: (ii) Corporate tax — It is levied on the profit of corporations and companies.(iii) Wealth tax — It is imposed on property of individuals depending upon the value of property. (iv) Gift tax - It is paid to the government by the recipient of gift depending upon the value of gift. (v) Estate duty — It is charged from successor of inherited property. Similarly, (vi) Expenditure tax, (vii) Fringe benefit tax are other examples of direct taxes. In short, direct tax are levied on the income and the property of persons and are paid directly to the state. Merits (i) Direct taxes help in reducing disparities in income and wealth of people. (ii) They are economical because cost of collection for government is relatively l...

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In India, whether you are earning or making a purchase of any goods or services, you as an individual or any corporate entity are obliged to pay taxes. Tax is a kind of mandatory recurring fee which is paid to the central and state government. It is also regarded as the main source of revenue for the government which helps them to build the economy of a country. At a broad level, taxes in India are categorized into: Direct and Indirect taxes. What is Direct Tax? Types of Direct Taxes in India Income Tax: The most common example of direct tax is income tax, which one pays directly to the government. Income tax is imposed on the income that is being earned in a financial year. The tax is paid on the basis of income tax slabs of the IT department. Read our article on the latest Capital Gains Tax: If any one is making capital gains; they are required to pay tax on those gains to the government. Capital gains may arise out of land or from investments such as equities. Based on the duration for which one held the investments, the Securities Transaction Tax (STT): If one is involved in security trading, then they are required to pay securities transactions tax, irrespective of any gains made out of it or not. * Please note that Estate and Wealth taxes have now been abolished. Pros: • Helps in curbing inflation. • Considered as equitable for all classes of people. • Directly increase the revenue of the government. Cons: • Documentation process is cumbersome. • Collection of direct...