Be it an individual or any business/organization, all have to pay the respective taxes in various forms. These taxes are further subcategorized into direct and indirect taxes depending on the manner in which they are paid to the taxation authorities.
- Direct tax
Direct tax is one that is levied directly on a taxpayer. It is non-transferable. Income tax is a common example of direct tax which is levied on your income. If you earn an income, you have to pay a tax on it. You cannot transfer your tax liability to someone else
Direct tax in India is administered by the Central Board of Direct Taxes (CBDT) and it is governed by the Department of Revenue.
- Indirect tax
Indirect tax, on the other hand, is not levied on income but on goods and services. It is levied on one taxpayer and paid by the other. For example, GST is levied on the sellers and manufacturers of goods and services. However, you, as a consumer, pay the GST when you purchase such goods and services.
In India, the Central Board of Indirect Taxes and Customs (CBIC) manages indirect taxes and is also governed by the Department of Revenue.