Question #8: How direct taxes are different from indirect

taxes?
BASIS FOR DIRECT TAX INDIRECT TAX
COMPARISON
Meaning Direct tax refers to Indirect tax is when the
financial charge, levied taxpayer is just the
directly on the hands that deposit the
taxpayer, and paid amount of tax to the
outrightly to the authority imposing it,
authority which while the burden of tax
imposes it, by the falls on the final
taxpayer. consumer.
Who pays the tax? Individuals, HUF, and Final Consumer
Companies
Nature Progressive Regressive

Incidence and Impact It falls on the same It falls on different

person persons
Liability A person on whom the The person receiving
tax is imposed is liable the benefits is liable for
for its payment. its payment and not the
person on whom it is
imposed.
Evasion Tax evasion is possible. Tax evasion is hardly
possible because it is
included in the price of
the goods and services.

Inflation Direct tax helps in Indirect taxes promotes

reducing inflation. inflation.