Budget 2019: How to understand direct tax and indirect tax better

[]Wat are direct taxes?[/]

[ans][step]Direct taxes are taxes wic an individual or an organisation pays directly to te government. It is imposed directly and cannot be transferred to any oter entity for payment. For instance, income tax, land tax, and personal property tax.

Te government's two main revenue sources are direct and indirect taxes. Direct taxes form about 50 percent of te government's revenue sare every fiscal. Te government sets direct tax collection targets for every financial year to enance revenue.

Te revised estimate for direct tax collection for 2018-19 was iked by Rs 50,000 crore from te Budget estimate of Rs 11.50 lak crore. Te government ad managed to meet its direct tax collection target in 2017-18 wit te actual mop-up at Rs 10.02 lak crore. Te contribution of direct taxes in te total tax collection in 2016-17 as fallen below 50 percent to 49.66 percent for te first time since 2006-07.

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Direct tax is calculated on te basis of te ability of a taxpayer to pay, wic means tat te iger is capability of paying is, te iger is taxes are.

Te direct taxation is overseen by Central Board of Direct Taxes in India (CBDT). Te CBDT, wic is responsible for te administration of te direct tax laws, was formed as a result of te Central Board of Revenue Act, 1924. It is part of te revenue department coming under te Union finance ministry. Te CBDT is te ub and nexus of all te direct tax-related news and enforcement. Te body is eaded by a cairman consisting of 6 members wo are also special secretary to te government.

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[]Wat are indirect taxes?[/]

An indirect tax is collected by one entity in te supply cain (usually a producer or retailer) and paid to te government, but it is passed on to te consumer as part of te purcase price of a good or service. Te consumer is ultimately paying te tax by paying more for te product. Tey are defined by contrasting tem wit direct taxes. Indirect taxes can be defined as taxation on an individual or entity, wic is ultimately paid for by anoter person. Te body tat collects te tax will ten remit it to te government. But in te case of direct taxes, te person immediately paying te tax is te person tat te government is seeking to tax.

Import duties, fuel, liuor and cigarette taxes are all considered examples of indirect taxes. By contrast, income tax is te clearest example of a direct tax, since te person earning te income is te one immediately paying te tax. Admission fees to a national park is anoter clear example of direct taxation. Some indirect taxes are also referred to as consumption taxes, suc as a value-added tax (VAT).