If you were to be appointed as the Finance Minister of India, which ta

1.	If you were to be appointed as the Finance Minister of India, which taxes would you prefer: direct taxes or indirect taxes and why?
Answer» As we know, direct tax and indirect tax are complimentary to each other i.e., they are not substitutes to each other. There is really nothing to choose between direct taxes and indirect taxes as such. Both of them have their relative merits and demerits. They differ from each other as: 1. Indirect taxes reach all the sections of the society; whereas direct taxes cannot reach all the sections. 2. Direct taxes can be highly progressive; whereas Indirect taxes are generally proportional. 3. Indirect taxes can be easily used to influence the consumption of specific commodities; whereas direct taxes cannot be used thus. In short, it is necessary to strike a balance between direct taxes and indirect taxes as a source of tax revenue.

If you were to be appointed as the Finance Minister of India, which taxes would you prefer: direct taxes or indirect taxes and why?

Answer»

As we know, direct tax and indirect tax are complimentary to each other i.e., they are not substitutes to each other. There is really nothing to choose between direct taxes and indirect taxes as such.

Both of them have their relative merits and demerits. They differ from each other as:

1. Indirect taxes reach all the sections of the society; whereas direct taxes cannot reach all the sections.

2. Direct taxes can be highly progressive; whereas Indirect taxes are generally proportional.

3. Indirect taxes can be easily used to influence the consumption of specific commodities; whereas direct taxes cannot be used thus. In short, it is necessary to strike a balance between direct taxes and indirect taxes as a source of tax revenue.

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