Difference Between Direct and Indirect Tax

Sunday , 26, April 2020 Comments Off on Difference Between Direct and Indirect Tax


Taxes are usually of two kinds, direct taxes, and indirect taxes. Direct taxes are taxes that are paid directly to the government and cannot be handed down from anyone else. Indirect taxes are taxes that can be paid via a chain of people. Some examples of direct and indirect taxes would be. 

Direct Tax 

Income tax -Taxes levied concerning profit or income of an individual. Income tax is calculated as tax rate times taxable income. 

Corporate tax – Tax imposed by an authority in the capital or income of a corporation's legal establishment is known as corporate tax. 

Gift Tax – A federal tax imposed on an item given to an individual by another only if the item is of considerable financial value. This tax is known as gift tax. It does exist in some though.

Indirect tax

Excise duty – This is a basic duty on manufactured goods that have been charged at the time of manufacturing, and not at the time of sales. 

Custom duty – This is a tax charged on goods that are imported and exported from the country. Some examples would be good like vehicles, food, and personal items like jewellery, etc. 

Knowing the difference between the kind of taxes and how to work them out and how to pay them can be quite hectic and confusing, so if you choose to avoid doing them you can always hire an accountant to do so. You can pick from the best accountants in Southport. They will help you with all your tax-related needs.