Write the differences between Direct Tax and Indirect Tax?
Direct taxes:
1.Direct tax is imposed directly on the taxpayer and is paid by the taxpayer directly to the government.The incidence and impact of the tax is on the same person.
2.Its burden cannot be transferred to other person.
3.It doesn't affect the prices.
Examples : income tax,property tax.
Indirect tax :
1.Indirect tax is tax collected by intermediaries (for e.g. retailers) from the ultimate taxpayer i.e. consumers.The incidence and impact of the tax is on different persons.
2.Its burden can be shifted from one person to other.For e.g. manufacturer shifts the burden of tax to retailers who shifts it to consumers.
3.Indirect tax may affect prices, as generally consumers pay high prices which are inclusive of taxes.
Examples : VAT,custom duty.