Taxation system in Pakistan:

Pakistan taxation system is based on:

1. Direct taxes
2. Indirect taxes

Direct taxes:
Direct taxes are progressive tax which is levied on the income of a person and it increases as the
person’s income rises. It means that the person who is earning more will pay more taxes.
Income tax and wealth tax are the example of direct taxes.

Indirect taxes:
Indirect taxes is a type of tax which is mostly levied on the expenditure of a person irrespective
of the person’s income. The concept indirect indicates that it’s burden shifts to the final
consumer. It is regressive in nature. Sales tax is the most prominent example of indirect taxes.