With reference to the taxation policy, mention three differences between direct taxes and indirect taxes.

Open in App

Solution

Direct tax Indirect tax
Direct tax is paid by individuals, firms, companies etc. Indirect tax is ultimately paid for by the end-consumer of goods and services.
The burden of tax cannot be shifted in case of direct taxes. Burden can be shifted for indirect taxes.
Lack of administration in collection of direct taxes can make tax evasion possible. Indirect taxes cannot be evaded as the taxes are charged on goods and services.
Direct tax can help in reducing inflation. Indirect tax may enhance inflation.

Suggest Corrections

Similar questions

Progressive taxation in direct taxes enables to bring equality in the

Progressive taxation in direct taxes ensures equality in the

Give the differences between direct tax and indirect tax.

Difference between capital receipts and revenue receipts.

Join BYJU'S Learning Program

Direct tax	Indirect tax
Direct tax is paid by individuals, firms, companies etc.	Indirect tax is ultimately paid for by the end-consumer of goods and services.
The burden of tax cannot be shifted in case of direct taxes.	Burden can be shifted for indirect taxes.
Lack of administration in collection of direct taxes can make tax evasion possible.	Indirect taxes cannot be evaded as the taxes are charged on goods and services.
Direct tax can help in reducing inflation.	Indirect tax may enhance inflation.