Indirect Tax, Difference between Direct & Indirect Tax - CA Final Notes

What is indirect tax?

Indirect taxes are a kind of tax where the incidence and impact of taxation do not fall on the same entity. The government collects it from an intermediary like a retailer or a manufacturer. The customer pays the eventual tax amount of the products and services.

Simply put, indirect taxes are those taxes that get shifted from one individual to another. Indirect taxes are not levied directly on the income of the taxpayer. The taxpayer pays it on the amount of the expenses incurred.

Some samples of indirect taxes include nuisance tax, entertainment tax, excise duty, etc.