Define tax. What is direct and indirect taxes give some examples of ea

1.	Define tax. What is direct and indirect taxes give some examples of each.
Answer» Tax – Tax is a legally compulsory payment imposed by the government. Direct tax- A tax in which liability to pay tax and actual burden of the tax falls on the same person. The burden of these taxes cannot be shifted to other person. These taxes can be made progressive easily. Examples- income tax, corporation tax, wealth tax, gift tax etc. Indirect tax- A tax in which liability to pay tax is of one person but actual burden of the tax falls on the some other person. The burden of these taxes can be shifted to some other person. These taxes cannot be made progressive easily. These can be made progressive by imposing more taxes on luxury items which are mainly used by the high income group people. Examples- sales tax, excise duty, service tax, VAT etc.

Define tax. What is direct and indirect taxes give some examples of each.

Answer»

Tax – Tax is a legally compulsory payment imposed by the government.

Direct tax- A tax in which liability to pay tax and actual burden of the tax falls on the same person. The burden of these taxes cannot be shifted to other person. These taxes can be made progressive easily. Examples- income tax, corporation tax, wealth tax, gift tax etc.

Indirect tax- A tax in which liability to pay tax is of one person but actual burden of the tax falls on the some other person. The burden of these taxes can be shifted to some other person. These taxes cannot be made progressive easily. These can be made progressive by imposing more taxes on luxury items which are mainly used by the high income group people. Examples- sales tax, excise duty, service tax, VAT etc.

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