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Question

Write a brief note on the difference between direct and indirect taxes?

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Solution

DIRECT TAX INDIRECT TAX
It is levied on income and activities conducted. It is levied on products or services.
The burden of tax cannot be shifted in case of direct tax. The burden of tax shifted for indirect taxes.
It is paid directly by a person concerned. It is paid by one person but he recovers the same from another person i.e. person who actually bears the tax ultimate consumer.
It is paid after the income reaches in the hands of the taxpayer It is paid before goods/service reaches the taxpayer.
Tax collection is difficult Tax collection is relatively easier
Example Income tax, wealth tax, etc Example GST, excise duty custom duty sale tax service tax

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