Question

Which among the following is not a direct tax?

• A. Income Tax
• B. Corporation Tax
• C. Sales Tax
• D. Gift Tax

Hint:

Ask who finally bears the cost. If it passes from seller to buyer through the price of goods, it is an indirect tax.

Answer 1

The Correct Option is C

Step 1: Understanding the Question.
We must find the tax type among the four that does not fit the definition of a direct tax.

Step 2: Key Fact or Approach.
A direct tax is one where the person who pays it to the government is the same person who bears its final cost, with no way to shift that cost onto anyone else. An indirect tax is different, it gets added to the price of goods or services and is really paid by the final buyer, even though a seller or trader deposits it with the government.

Step 3: Detailed Explanation.
Income Tax is deducted from a person's own earnings and paid by that person, so it is direct. Corporation Tax works the same way for companies, charged on their profits and paid by the company itself. Gift Tax is charged on the person who receives a valuable gift, again a direct charge on that individual. Sales Tax works differently, a shopkeeper adds it to the price of goods and collects it from the customer at the counter, then passes it on to the government. The final burden sits with the customer, which is the defining feature of an indirect tax.

Step 4: Final Answer.
Sales Tax is an indirect tax, so it is the one that is not a direct tax, matching option (c).