how direct and indirect taxes are complementary to each other
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Difference between Direct and Indirect Taxes. Direct and indirect taxesinclude all the different types of taxeslevied by the government. Direct taxesinclude the taxes that cannot be transferred or shifted to anotherperson, for instance the income tax an individual pays directly to thegovernment.
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Difference between Direct and Indirect Taxes. Direct and indirect taxesinclude all the different types of taxeslevied by the government. Direct taxesinclude the taxes that cannot be transferred or shifted to anotherperson, for instance the income tax an individual pays directly to thegovernment.
A more realistic differentiation between the two taxes may be as following. Direct Taxesare the taxes that are levied on the income of individuals or organisations. They include Income tax, corporate tax, wealth tax and inheritance tax. Indirect taxes are those paid by consumers when they buy goods and services.
An indirect tax (such as sales tax, per unit tax, value added tax (VAT), or goods and services tax (GST)) is a tax collected by an intermediary (such as a retail store) from the person who bears the ultimate economic burden of the tax (such as the consumer).
Several State taxes will also be included in GST:
VAT / Sales tax.
Entertainment tax (unless it is levied by the local bodies).
Luxury tax.
Taxes on lottery, betting and gambling.
State Cesses and Surcharges in so far as they relate to supply of goods and services.
Entry tax.
France was the first country to implement the GST in 1954.
The GST council has fitted over 1300 goods and 500 services under four tax slabs of 5%, 12%, 18% and 28% under GST. This is aside the tax on gold that is kept at 3% and rough precious and semi-precious stones that are placed at a special rate of 0.25% under GST. 7% goods and services fall under this category.
A more realistic differentiation between the two taxes may be as following. Direct Taxesare the taxes that are levied on the income of individuals or organisations. They include Income tax, corporate tax, wealth tax and inheritance tax. Indirect taxes are those paid by consumers when they buy goods and services.
An indirect tax (such as sales tax, per unit tax, value added tax (VAT), or goods and services tax (GST)) is a tax collected by an intermediary (such as a retail store) from the person who bears the ultimate economic burden of the tax (such as the consumer).
Several State taxes will also be included in GST:
VAT / Sales tax.
Entertainment tax (unless it is levied by the local bodies).
Luxury tax.
Taxes on lottery, betting and gambling.
State Cesses and Surcharges in so far as they relate to supply of goods and services.
Entry tax.
France was the first country to implement the GST in 1954.
The GST council has fitted over 1300 goods and 500 services under four tax slabs of 5%, 12%, 18% and 28% under GST. This is aside the tax on gold that is kept at 3% and rough precious and semi-precious stones that are placed at a special rate of 0.25% under GST. 7% goods and services fall under this category.
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