Hi I am CA student. I want to know about direct tax. May I know, Is it possible to have only direct taxes and do away with indirect taxes?
Taxes come in many avatars – income tax, sales tax, corporate tax, service tax and so on. There are so many types of taxes that an average Indian pays that often you pay a tax without even knowing that you’re paying it! Wouldn’t you like to know exactly what taxes we end up paying in our day to day lives, both knowingly and unknowingly? So here goes! Direct and Indirect Taxes The most fundamental classification of taxes is based on who collects the taxes from the tax payer. Direct Taxes, as the name suggests, are taxes that are directly paid to the government by the taxpayer. It is a tax applied on individuals and organizations directly by the government e.g. income tax, corporation tax, wealth tax etc. Indirect Taxes are applied on the manufacture or sale of goods and services. These are initially paid to the government by an intermediary, who then adds the amount of the tax paid to the value of the goods / services and passes on the total amount to the end user. Examples of these are sales tax, service tax, excise duty etc.