What is the concept of net indirect tax?

Net Indirect Tax is the difference between the Indirect tax and subsidy. To find out Market Prices (MP), indirect taxes are added and subsidies are subtracted from Factor Cost (FC) as explained above. Symbolically: Market Price = Factor Cost + Indirect taxes – Subsidies. = Factor Cost + Net indirect taxes.

What is indirect tax with example?

Indirect taxes are typically added to the prices of goods or services. Sales tax, value-added tax, excise tax, and customs duties are examples of indirect taxes.

What is the formula of net indirect tax?

Calculate value of Net Indirect Taxes (Indirect Taxes – Subsidies). My point is wages+rent+interest +profit will gives GVA at basic prices and C+G+I+NX would give GDP at market prices.

What is meant by indirect tax?

Indirect tax is defined as the tax imposed by the government on a taxpayer for goods and services rendered. Unlike direct taxes, indirect tax is not levied on the income, revenue or profit of the taxpayer and can be passed on from one individual to another.

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What are the types of indirect tax?

Following are the types of Indirect Taxes on India

  • Service Tax.
  • Excise duty.
  • Value Added Tax.
  • Custom Duty.
  • Entertainment Tax.
  • Securities Transaction Tax.


Who pays indirect tax?

3. Collection is easy. Unlike direct taxes where documents need to be accomplished and filing is required, indirect taxes are paid the moment a consumer buys a product. The tax is collected by the supplier and paid to the government.

What is direct tax and indirect tax with examples?

Direct taxes include tax varieties such as income tax, corporate tax, wealth tax, gift tax, expenditure tax etc. Some examples of indirect taxes are sales tax, excise duty, VAT, service tax, entertainment tax, custom duty etc.

How is income method calculated?

National Income = C (household consumption) + G (government expenditure) + I (investment expense) + NX (net exports).

What is the meaning of factor cost?

Factor cost or national income by type of income is a measure of national income or output based on the cost of factors of production, instead of market prices. … It can be defined as the actual cost incurred on goods and services produced by industries and firms is known as factor costs.

What is difference between factor cost and market price?

Factor cost is the total amount which the manufacturer had to invest in production of a good or commodity. It doesn’t include any taxes imposed on the final product. But, the market price is the final cost at which the manufacturer sells the goods to customers.

What is difference between direct and indirect tax?

While direct taxes are imposed on income and profits, indirect taxes are levied on goods and services. A major difference between direct and indirect tax is the fact that while direct tax is directly paid to the government, there is generally an intermediary for collecting indirect taxes from the end-consumer.

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What are the advantages and disadvantages of indirect tax?

Since indirect tax is the same for both the rich and the poor, it can be deemed unfair to the poor. Indirect tax is applicable to anyone who makes a purchase, and while the rich can afford to pay the tax, the poor will be burdened by the same amount of tax. Thus, indirect taxes may be seen as regressive.

How much indirect tax do we pay?

Indirect Tax

Service tax is charged at the rate of 15% currently. The taxability arises once the value of services exceeds Rs. 10 lakhs during the financial year.

What is indirect tax and types?

Types of Taxes:

There are two types of taxes namely, direct taxes and indirect taxes. … You pay some of them directly, like the cringed income tax, corporate tax, and wealth tax etc while you pay some of the taxes indirectly, like sales tax, service tax, and value added tax etc.

What are the characteristics of indirect tax?

Here are the key features of indirect taxes:

  • Tax liability: The service provider or seller pays indirect taxes to the government, and the liability is transferred to the consumer.
  • Payment of tax: The seller pays indirect taxes to the government and the same is transferred to the consumer.

What is the importance of indirect tax?

The importance of taxes for the government when it comes to indirect taxation is that they are an automatic function that accompany the buying and selling of goods and services across the country. They are therefore easy to collect and convenient for both taxpayers and the tax collection authorities.

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