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{Tax levied directly on income or wealth.} & \text{Tax levied on goods and services, ultimately paid by consumers.} \\ \hline \text{Examples: Income Tax, Wealth Tax.} & \text{Examples: GST, Excise Duty.} \\ \hline \text{Collected by the government directly from the taxpayer.} & \text{Collected by an intermediary and remitted to the government.} \\ \hline \end{array} ]