The main merit of an indirect tax is that it touches all income groups. Direct tax, like income tax, is imposed on persons having a certain minimum level of income. People having income below that level are exempted from the payment of tax.
What are the merits of indirect taxes?
Advantages of Indirect Taxes
- Everyone can contribute. …
- They are convenient. …
- They cannot be evaded. …
- They are spread over a wide range. …
- Indirect Tax can be regressive. …
- They raise price of commodities. …
- No civic consciousness.
What are the merit and demerit of direct and indirect tax?
Direct taxes are levied on a person’s or a firm’s income or wealth and indirect taxes on spending on goods and services. Thus, direct taxes are paid directly by the person or firm on whom the assessment is made, while indirect taxes are paid indirectly by consumers in the form of higher prices.
Which is one of the disadvantages of indirect taxes?
Indirect taxes have some disadvantages too, which are as follows: ADVERTISEMENTS: (i) Regressive: … For instance, salt tax in India fell more heavily on the poor than on the rich, as it had to be paid at the same rate by all.
Which of the following is a merit of the Indian taxation system?
The following are the merits of direct taxes: Economical:Direct taxes are very economical in the sense that the cost of collecting these taxes are relatively less as they are usually collected at the source an they are paid to the government directly. Certainty : Direct taxes satisfy the canon of certainty.
How much indirect tax do we pay?
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 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.
Is a merit of direct tax?
Merits of Direct Taxes: … The larger burden of these progressive taxes fall on the rich people who have capacity to bear them and the poor people with less ability to pay have to bear less burden. 2. Direct taxes are important instrument of reducing inequalities of income and wealth.
What is the demerit of direct tax?
Demerits of direct taxation are: 1. Pinching 2. Inconvenient 3. Evasion and Corruption 4.
What are the merits and demerits?
Merits means advantages of a particular thing whereas demerits means the disadvantages of the thing.
How can indirect taxes be avoided?
Indirect taxes can be avoided in certain circumstances, by not entering into those transactions, which call for such taxes.
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 are the problems of indirect taxes?
There is lack of cross verification of returns filed under various State as well as Central Taxation Rules and there are different in detailed filed by the assessed by paying Central and State taxes simultaneously. At present there are more than fifteen taxes under Indirect Tax System.
What is GST its merits and demerits?
Companies with a turnover up to Rs.75 lakh under the GST taxation process can benefit from composition schemes and pay only 1% tax on their turnover. … GST is aimed at reducing corruption and sales without receipts. GST reduces the need for small companies to comply with excise, service tax and VAT.
What are merits and demerits of democracy?
Answer Expert Verified
1) a democratic government is better form of government because it is more accountable form of government. 2) democracy improves the quality of decision making. 3) democracy enhances the dignity of citizens. 4) poor and least educated has the same status as the rich and educated.
Is GST good or bad?
Being the Biggest tax reform in India, GST will allow the real GDP growth of the Indian economy to hit 6.75 per cent in this fiscal year with expectations of 7 to 7.5 per cent real GDP growth in 2018-19. SMEs and small taxpayers have benefitted from the GST system with a number of relaxations.