32 RRA Sith Semester (Businees faxation

Indirect

1.1.10. Difference between Direct and Indi

Taxes Indireet Taxes
is
Basis of Diferenc Direct Taxes indirect
taxes

The burden
of
1) Transfer of The burden of direct taxes is from
from the pe
the
person

transferred
Burden horne by the person on whom to another
person.
who pays it,
lev ied tax impact
In case of indirect
of direct tax the on the
the
2 Impact and In case

incidence are and

on
incidence
i ncidence
are

Incidence mpact and different persons.

the s a m e person
who pays the |
are not
tax. |Indirect
taxes
Direct taxes are progressive.
3 Progressive progressive.
are imposed on
on Indirect taxes
Direct taxes are imposed impersonal services.
4 Imposition goods and
Incomes, such as, wages, rent,
nterest, property, profits,
wealth, gifts etc.
Indirect taxes are
hidden in
in
Direct taxes are to be paid in | of
5) Burden Felt
prices and thus the burden
alump sum and hence their|
indirect taxes is not felt.
burden is felt.
Administrative cost of direct | The
administrative
administrative Cost
cost of
of
Adnministrative
6)
laxes is low
indirect taxes is quite high as

Cost to direct taxes.

compared
| Indirect taxes are generally n0t
7) Removal of Direct taxes are considered as
suitable from the point of view
Inequalities an important instrument of
inequalities of of removing inequalities of
removing
wealth.
income and wealth as they |income and
fall more heavily on the rich
than the poor.
Indirect taxes are uncertain.
8) Basis of Direct taxes are certain.
Certainty
on Indirect taxes are not based o
9) Taxable |Direct taxes are based
Capacity taxablecapacity, taxable capacity.