Distinguish between Direct tax and Indirect tax with suitable examples.
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Solution and Explanation
Direct Tax: A direct tax is levied directly on individuals or organizations and is paid directly to the government. Examples include:
Income Tax: Levied on the income earned by individuals or organizations.
Corporate Tax: Paid by corporations on their profits. Indirect Tax: An indirect tax is levied on goods and services and is collected by an intermediary (e.g., a retailer) from the consumer. Examples include:
Goods and Services Tax (GST): Levied on the sale of goods and services.
Excise Duty: Paid on the manufacture of goods.
Conclusion: Direct taxes are based on the taxpayer's income or profits, while indirect taxes are levied on consumption and are passed on to consumers.
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