Tag: government and taxes

Government spends tax receipts for common benefit of the society. Tax payer cannot expect that the tax amount will be used for his direct benefit.

Indirect taxes can be avoided in certain circumstances, by not entering into those transactions, which call for such taxes. 

Direct taxes are levied on income or wealth and are paid directly by the individual or entity, which limits the tax base compared to indirect taxes that are embedded in the price of goods and services consumed by everyone.

A direct tax is the tax, the final burden of which is borne by the person on whom it is imposed. For example: Income tax is a direct tax. Thus, direct tax is called direct tax as it is collected directly from the income earners and the burden of the tax cannot be shifted to different persons.

 Personal Income Tax (PIT) is a direct tax levied on income of a person. A person means an individual, an ordinary partnership, a non-juristic body of person and an undivided estate. In general, a person liable to PIT has to compute his tax liability, file tax return and pay tax, if any, accordingly on a calendar year basis.

Union taxes are given in the list of 7th schedule in the constitution.

Excise tax is an inland tax on the sale, or production for sale, of specific goods. Excises are distinguished from customs duties, which are taxes on imports.

A direct tax is one paid directly by the person or organization to the government. Corporation tax is a direct tax on the profits of a company.

Indirect taxes are those where the burden can be shifted to another person, typically through the price of goods or services. Both Customs duty and Excise duty are classic examples of indirect taxes, making option D the correct choice.

Income tax is a direct tax because the burden cannot be shifted, while service tax is an indirect tax collected on services provided. Option B correctly identifies these categories.