What is Direct Tax?
Tax that is imposed on the property and income of individuals and companies, and is paid by them directly to the government is known as Direct Tax. For example, Corporate Tax, Income Tax, Death Duty, Capital Gains Tax, etc. The features of Direct Tax are as follows:
- Direct Tax is imposed on companies and individuals.
- These taxes have a direct impact on the income level and purchasing power of people and also help in changing the level of aggregate demand in the economy.
- The liability to pay tax and the actual burden of the tax lie on the same individual. It means that one cannot shift the burden of paying taxes on others. For example, Income Tax tax is a tax for which the liability to pay the tax and the actual burden lies on the same person to whom the tax is levied.
- Direct Tax Systems can be Progressive, Regressive, and Proportional.
Difference between Direct and Indirect Tax
Direct and Indirect Tax are two types of taxes imposed on the property and income of individuals and companies, which is paid by them directly and indirectly to the government respectively.
Table of Content
- What is Direct Tax?
- What is Indirect Tax?
- Difference between Direct Tax and Indirect Tax
- How to Determine Whether a Tax is Direct or Indirect?
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