Explain the basis of classifying taxes into direct and indirect tax. Give two examples of each.


Taxes are classified into direct and indirect on the basis of  'final burden'.
Direct Tax: Where final burden of tax is borne by the person on whom it is imposed is classified as Direct Tax. Example: income tax and wealth tax.
Indirect Tax:
Where final burden of tax can be shifted to other persons on persons other than on whom imposed called Indirect Tax. Example: sales tax and goods and services tax.

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