What is the difference between Direct and Indirect Taxes?

Tax is the money paid to the government by individuals and business organizations. The money generated through taxation is used by the government to provide basic amenities and to run different programs of the government. Direct and indirect taxes are two examples of taxes that are imposed by the government. A direct tax simply means the money you pay directly to the government as imposed by the government. Examples are property taxes, income taxes, corporate taxes, gift taxes, and others.

An indirect tax, on the other hand, can be defined as the tax which is imposed on a person that enjoys the goods and services, and it is paid indirectly to the government. Direct taxes are paid by the same set of individuals to the government, whereas indirect taxes are paid by different people. Tax evasion is very easy with direct taxes, while indirect taxes cannot be evaded. While direct taxes are reducing inflation, indirect taxes will increase inflation

Direct and Indirect Taxes are both taxes that are levied under the authority of the government. They are the crucial components of government revenue and the economy at large. The primary difference between direct tax and indirect tax is for a taxpayer to shift the burden of tax to others. To be precise, direct taxes are the tax that cannot be moved to another person, for example, taxes that individual pay directly to the government. Immediate fees are paid to the central government as well as the state government in accordance to the type of tax levied which may include wealth tax, gift tax, expenditure tax, income tax, corporate tax and many more.

On the other hands, indirect tax are taxes that can be shifted to or transferred to another person. For instance, excise duty, value-added tax (VAT), sales tax, service tax, customs duty, and many others. Direct taxes can help in reducing inflation, but indirect taxes in some cases may increase inflation. A direct tax is paid by individuals, firms, companies, etc. while indirect taxes are paid by the end user of goods or services.