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Direct Tax & Indirect Tax Video Lecture | Indian Economy for UPSC CSE

144 videos|298 docs|137 tests

FAQs on Direct Tax & Indirect Tax Video Lecture - Indian Economy for UPSC CSE

1. What are direct taxes?
Ans. Direct taxes are taxes that are imposed directly on individuals or organizations and cannot be passed on to someone else. Examples of direct taxes include income tax, property tax, and corporate tax.
2. What are indirect taxes?
Ans. Indirect taxes are taxes that are imposed on goods and services rather than on individuals or organizations directly. These taxes are typically included in the price of the goods or services and are passed on to the consumer. Examples of indirect taxes include sales tax, value-added tax (VAT), and excise duty.
3. How do direct taxes differ from indirect taxes?
Ans. Direct taxes are paid directly by individuals or organizations to the government based on their income, profits, or assets. Indirect taxes, on the other hand, are paid by consumers when they purchase goods or services. Direct taxes are progressive in nature, meaning that the tax rate increases as income or profits increase, while indirect taxes are regressive, as they have a uniform impact on all consumers regardless of their income level.
4. Why are direct taxes considered to be more equitable than indirect taxes?
Ans. Direct taxes are considered to be more equitable than indirect taxes because they are based on a person's ability to pay. Since direct taxes are levied based on income or assets, those with higher incomes or more assets pay a higher amount of tax. On the other hand, indirect taxes, such as sales tax, have the same rate for all consumers, regardless of their income level, which can disproportionately impact low-income individuals.
5. How do direct and indirect taxes contribute to government revenue?
Ans. Direct taxes and indirect taxes both contribute to government revenue, but they do so in different ways. Direct taxes provide a steady source of income for the government, as they are based on income or profits, which tend to be more stable over time. Indirect taxes, on the other hand, can fluctuate with changes in consumer spending, making them more volatile. Governments often use a combination of direct and indirect taxes to ensure a stable and diversified source of revenue.
144 videos|298 docs|137 tests

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