Question

Indirect tax is:

• A. Sales Tax
• B. House Tax
• C. Water Tax
• D. Surcharge

Answer 1

The correct option is A Sales Tax

Direct taxes are paid in entirety by a taxpayer directly to the government. It is also defined as the tax where the liability, as well as the burden to pay it, resides on the same individual. Direct taxes are collected by the central government as well as state governments according to the type of tax levied. Major types of direct tax include Income tax, corporate tax etc.

Indirect tax includes those taxes where the liability to pay the tax lies on a person who then shifts the tax burden to another individual. Some types of indirect taxes are sales tax, service tax etc.

Therefore sales tax is an indirect tax.