Explain with the help of suitable examples the basis of classifying taxes into direct and indirect taxes

Question 10. Explain with the help of suitable examples the basis of classifying taxes into direct and indirect taxes
Class  Class 12
Subject Economics (Macroeconomics)
Category Class 12 Economics Solutions Sandeep Garg

Sandeep Garg Macroeconomics Class 12 Solutions Circular flow of Income – Short Questions Q.10 Explain with the help of suitable examples the basis of classifying taxes into direct and indirect taxes.

Solution:-

The basis of classifying between direct tax and indirect tax is burden to pay. In other words, in case of direct taxes burden to pay tax cannot be shifted but in case of indirect taxes burden to pay tax can be shifted. For example, income tax is a direct tax as it is levied and burden to pay lies on the same person whereas GST is an indirect tax because it is levied on businesses but the burden to pay lies on the customer or consumer.




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