Indirect and Direct Tax
Indirect and Direct tax is a type of tax that is imposed on the income or wealth of an individual or entity. It is called “direct” because the tax is levied directly on the person or entity that is liable to pay it. The tax liability cannot be shifted to another party.
Examples of direct taxes include:
1.Income tax:
This is a tax imposed on the income of individuals and businesses. The tax is calculated based on the income earned during a particular financial year.
2. Corporate tax
This is a tax imposed on the profits earned by companies. The tax rate is generally a percentage of the profits earned by the company.
3. Property tax
This is a tax imposed on the value of immovable property, such as land and buildings. The tax rate is generally a percentage of the assessed value of the property.
Indirect tax, on the other hand, is a type of tax that is not levied directly on the person or entity that is liable to pay it. Instead, it is imposed on goods and services, and the tax liability can be shifted to another party, usually the end consumer.
Example of indirect tax include:
GST
GST (Goods and Services Tax) is a value-added tax that was introduced in India on July 1, 2017. It replaced multiple indirect taxes such as VAT (Value Added Tax), excise duty, and service tax, which were levied at different stages of the supply chain. The GST system aims to create a unified and simplified tax structure across the country.
Under the GST system, goods and services are classified into different tax rates, such as 5%, 12%, 18%, and 28%, based on their nature and the level of taxation required. Certain goods, such as petroleum products and alcohol, are still subject to separate state taxes.
To visit: https://www.incometax.gov.in
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