Question

Distinguish between direct tax and indirect tax with the help of suitable examples.

Hint:

Direct taxes are income-based, while indirect taxes are consumption-based. Examples: Income Tax (direct) and GST (indirect).

Answer 1

\[ \begin{array}{|l|l|} \hline \textbf{Direct Tax} & \textbf{Indirect Tax} \\ \hline \text{Imposed directly on income or wealth of individuals.} & \text{Imposed on goods and services; paid indirectly by consumers.} \\ \hline \text{Example: Income Tax, Wealth Tax.} & \text{Example: GST, Excise Duty.} \\ \hline \text{Collected directly by the government from taxpayers.} & \text{Collected by intermediaries and paid to the government.} \\ \hline \end{array} \]