feel the pinch of paying tax. . . .
Demerits of Indirect Taxes ( ) Higher Cost of Collection The cost of collection of indirect taxes is higher than the direct taxes. The Government has to spend huge money to collect indirect taxes. ( ) Inelastic Indirect taxes are less elastic compared to direct taxes, as indirect taxes are generally proportional. ( ) Regressive Indirect taxes are sometimes unjust and regressive in nature since both rich and poor persons have to pay same amount as taxes irrespective of their income level.
( ) Uncertainty The rise in indirect taxes increases the price and reduces the demand for goods. Therefore, the Government is uncertain about the expected revenue collection. So Dalton says under indirect taxes + is not but or even less than . ( ) No civic Consciousness As the tax is hidden in price, the consumers are not aware of paying tax.
- - Fiscal Economics . . . Comparison Chart Basis For Comparison Direct Tax Indirect Tax Meaning Direct tax is referred to as the tax, levied on person’s income and wealth and is paid directly to the government.
Indirect Tax is referred to as the tax, levied on a person who consumes the goods and services and is paid indirectly to the government. Nature Progressive Regressive Incidence and Impact Falls on the same person. Falls on different persons. Tax base Income or wealth of the assessee Purchase/sale/manufacture of goods and provision of services 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 controlling the inflation. Indirect taxes push up price inflation. Imposition and collection Imposed on and collected from assesses, i.e.
Individual, HUF (Hindu Undivided Family), Company, Firm etc. Imposed on and collected from consumers of goods and services but paid and deposited by the assessee. Burden Cannot be shifted. Can be shifted .
. . GST (Goods and Service Tax) GST is an Indirect Tax which has replaced many Indirect Taxes in India. The Goods and Service Tax Act was passed in