TAX TERMINOLOGY

TAX TERMINOLOGY

1. Direct Taxes

Direct Taxes are taxes directly imposed on the income or wealth of individuals and corporations. The burden of the tax cannot be shifted to another person. Examples include:

• Income Tax
• Corporate Tax
• Capital Gains Tax

Direct taxes are based on the ability-to-pay principle and play an important role in redistributing income and reducing economic inequality.

2. Indirect Taxes

Indirect Taxes are taxes levied on goods and services, and the burden of the tax can be passed on to consumers through higher prices. They are collected by intermediaries such as manufacturers or traders and later paid to the government. Examples include:

• Goods and Services Tax (GST)
• Customs Duties
• Excise Duties

Indirect taxes form a significant source of government revenue.