Budget 2021: What is indirect tax? Here’s all you need to know



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Types of indirect tax

There are different types of indirect taxes in India – service tax, excise duty, value-added tax (VAT), custom duty, stamp duty, entertainment tax, securities transaction tax- are examples of indirect taxes. All these indirect taxes after the introduction of GST were brought under one tax for the citizens.

Features of Indirect Tax

Tax payment: The seller first pays the indirect tax to the government and recovers it from the consumer.

Nature: Indirect taxes are regressive in nature.

Saving and investment: Indirect taxes are growth oriented and encourages the consumers to save and invest.

Tax evasion: Indirect taxes are difficult to evade.

Convenience: This type of tax does not put the burden on the taxpayer as they are paid only if they are purchasing an item. State authorities too find it quite convenient to levy the tax as they are collected directly from the manufacturer or seller, saving time and effort.



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