Question

Give any five points of difference between direct and indirect tax.

Give any three points of difference between direct and indirect tax.

Differentiate between direct and indirect taxes.

Give three differences between direct taxes and indirect taxes.

Mention five differences between a direct tax and an indirect tax.

Giving examples differentiate between direct taxes and indirect taxes.

Answer 1

	Direct Tax	Indirect Tax
1.	A direct tax is one in which the tax's incidence and effect are on the same individual.	A tax that has varied effects and incidence on different people is known as an indirect tax.
2.	It has an impact on the earnings and assets of individuals as well as businesses.	It is imposed on the costs that different individuals and institutions bear.
3.	High rate tax evasion occurs when taxpayers hide their income to avoid paying as much in taxes.	There are fewer opportunities for tax evasion because the taxes are factored into the commodity prices.
4.	The canon of certainty is satisfied by direct taxes because both the government and taxpayers are fairly aware of the amount of money they will be receiving from taxes.	There's always a degree of uncertainty when predicting indirect tax revenue, which makes it impossible to estimate with accuracy.
5.	Because they are collected at the source, direct taxes are cost-effective in that their collection costs are low.	Since indirect taxes must be collected from numerous people, they are not cost-effective to collect because of their high administrative costs.

Answer 2

Basis	Direct Taxes	Indirect Taxes
1. Base	These taxes are imposed on the income and wealth of people.	These taxes are imposed on goods and services.
2. Shift of Burden	Tax burden cannot be shifted.	Tax burden can be shifted.
3. Nature	These taxes are generally progressive in nature.	These taxes are often regressive.
4. Convenient	They cause a lot of inconvenience to the taxpayers as they are painful to the tax payers.	Indirect taxes are convenient than direct taxes.
5. Coverage	Direct taxes have limited coverage, as they paid only by these whose income is high.	Indirect taxes have wide coverage as every individual will have to pay tax who buys goods and services.
6. Example	Income Tax, wealth Tax, Corporation Tax (i.e., tax on company's income), Estate Duty.	GST, Excise Duty, Customs Duty, etc.