Question

Which of the following is not a direct tax in India?

• A. Income Tax
• B. Capital Gain Tax
• C. Excise Tax
• D. Corporate Tax

Answer 1

Answer:

C. Excise Tax

Excise tax is an indirect tax, whereas income tax, capital gains tax, and corporate tax are examples of direct taxes in India. The tax structure in India is a three-tier structure: local municipal bodies, state, and central government. Taxation in India is broadly classified into direct and indirect tax. Let us look at these two types of taxes and catch the difference between direct and indirect taxes. Direct tax is levied on people's income or profits. For example, a taxpayer pays the government for different purposes, including income tax, personal property tax, FBT, etc. The burden has to be borne by the person on whom the tax is levied and cannot be passed on to someone else. Central Board of Direct Taxes (CBDT) governs and administers the Direct Tax. Conversely, indirect tax is levied by the government on goods and services. Therefore, it can be shifted from one tax-paying individual to another. E.g; the wholesaler can pass it on to retailers, who then pass it on to customers. Therefore, customers bear the brunt of indirect taxes. The Central Board of Indirect Taxes and Customs (CBIC) governs and administers indirect taxes.