Direct Tax and Indirect Tax

Direct taxes are non-transferable taxes paid by the tax payers to the government and indirect taxes are transferable taxes where the liability to pay can be shifted to others. In this article, we are going to discuss difference between direct and indirect tax & their categories.

Direct-and-Indirect-Tax
Direct-and-Indirect-Tax

Direct Tax

Direct tax is directly paid by tax payer to the government. It is a type of tax that is non-transferable, which means that if I have the liability to pay a sum of money towards tax, I cannot transfer this liability to another person.  There are various categories of Direct Tax:

1) Income Tax

Everyone is familiar with this tax, because individuals, salaried persons or self-employed persons have to pay Income tax to the government. The amount of tax liability depends upon the income of the particular person.

2) Corporate Tax

A Corporate tax is also called corporation tax or company tax, imposed on the profit or capital of corporations or analogous legal entities. It is a tax paid by corporations and business located in India or whose income is generated from India.

3) Capital gains tax

This tax is paid by individuals on specific investments or assets. It is divided into long team capital gains tax (LTCG tax) and short term capital gains tax (STCG tax).

Direct-and-Indirect-Tax
Direct-and-Indirect-Tax

Indirect Tax

Indirect tax is paid by the end user/consumer on purchasing specific goods or services. It is paid to the central government and state government. It is always hidden or included in the total price.

1) GST

In 2017, our government combined all the indirect taxes like excise duty, sales tax, value added tax and more & introduced goods and services tax (GST). GST is paid to the central & state government in the same proportion.

2) Stamp duty

Stamp duty is a tax charged on property sales in India and its documentation. It is the evidence that property has been purchased either in the buyer's or seller's name and is valid for 6 months.

3) Entertainment tax

Entertainment tax is a tax charged for access to products or services related to the purpose of entertainment. These include movie theatres, parks, arcades, and the like.


Thanks for reading the topic.

Please comment on your feedback whatever you want. If you have any questions, please ask us by commenting.


References: –

https://academicsb.blogspot.com