Multiple choice

Which one of the following is not an example of direct tax?

  1. Income tax

  2. Wealth tax

  3. Gift tax

  4. Sales tax
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Direct taxes are levied directly on an individual's income or wealth (income tax, wealth tax, gift tax). Sales tax (now GST) is an indirect tax because it's collected by intermediaries (sellers) from consumers who ultimately bear the tax burden. The person paying the tax (seller) and the person bearing the economic burden (consumer) are different in indirect taxes.

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