Explanation:

Indirect Tax

• It is a tax levied by the Government on goods and services and not on the income, profit or revenue of an individual and it can be shifted from one taxpayer to another.

• Goods and Service Tax (GST) is one of the existing indirect tax levied in India. It has subsumed many indirect tax laws.

Let’s discuss a few indirect taxes that were earlier imposed in India:

• Customs Duty- It is an Import duty levied on goods coming from outside the country, ultimately paid for by consumers and retailers in India.

• Central Excise Duty– This tax was payable by the manufacturers who would then shift the tax burden to retailers and wholesalers.

• Service Tax– It was imposed on the gross or aggregate amount charged by the service provider on the recipient.

• Sales Tax– This tax was paid by the retailer, who would then shifts the tax burden to customers by charging sales tax on goods and service.

• Value Added Tax (VAT)– It was collected on the value of goods or services that were added at each stage of their manufacture or distribution and then finally passed on to the customer.