Direct taxes are levied on a person’s or a firm’s income or wealth and indirect taxes on spending on goods and services. Wide Base. Generally, indirect tax is shifted to the final consumers while purchasing goods or services. What are the Indirect Taxes ? Shifting Of Burden. Features Of Indirect Tax The main characteristics or features of indirect tax can be highlighted as follows: 1. From the name itself, direct tax is paid directly to the government while the indirect tax is paid indirectly. 2. A carbon tax is also an indirect tax. People having income below that level are exempted from the payment of tax. (A) Merits: 1. Meaning ↓ An indirect tax is one in which the burden can be shifted to others. Thus, direct taxes are paid directly by the person or firm on whom the assessment is made, while indirect taxes are paid indirectly by consumers in the form of higher prices. The tax payer is not the tax bearer. The impact and incidence of indirect taxes are on different persons. Indirect vs. the tax payer dose not percive adirect pinch while paying indirect taxes. Important examples of indirect tax are VAT, service tax, excise duties, import duties, etc.

For e.g. Direct tax, like income tax, is imposed on persons having a certain minimum level of income. An indirect tax is levied on and collected from a person who manages to pass it on to some other person or persons on whom the real burden of tax falls. Shifting of tax burden commodity taxasation In indirect taxes, the ability of tax payer is indirectly determined. Direct taxes include taxes on income and property, whereas indirect taxes cover taxes on commodities and services. An indirect tax is imposed on producers (suppliers) by the government. Important direct taxes are income tax, corporate tax and wealth tax. Wide Coverage: The main merit of an indirect tax is that it touches all income groups. Examples include duties on cigarettes, alcohol and fuel and also VAT. Indirect taxes and direct taxes differ in many ways, but the most common is how they are paid. Let us make an in-depth study of the merits and demerits of indirect taxes.

Indirect taxes are a form of government intervention in markets.

Direct Taxes.

Indirect Tax: An indirect tax is a tax that is paid to the government by one entity in the supply chain, but it is passed on to the consumer as part of the price of a good or service. In indirect tax, burden of tax can be transferred or shifted to other people or entities. Over the years, India’s tax structure had come to rely more on indirect taxation.

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