Methods of Taxation

Tax: It is a compulsory financial charge imposed on the citizen by government organization to fund public expenditure.

Types of Taxes

  • Direct Tax: Direct tax is a tax where the incidence and impact fall on the same entity. For example, Income Tax, House Tax etc.
  • Indirect Tax: In Indirect Tax, the incidence and impact falls on the different entity. For example, GST, Service Tax etc.

Incidence of Tax: The point where tax looks as being imposed is known as incidence of tax.

Impact of Tax: The point where tax makes its effect felt is known as Impact of tax.

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