General
General Products
Simple & Transparent! Policies that match all your insurance needs.
Car Insurance
Two Wheeler Insurance
Commercial Vehicle Insurance
Health Insurance
Property Insurance
Travel Insurance
Business Insurance
Car Insurance
Two Wheeler Insurance
Commercial Vehicle Insurance
Health Insurance
Property Insurance
Travel Insurance
Scan to download
Life
Life Products
Digit Life is here! To help you save & secure your loved ones' future in the most simplified way.
Term Life
Savings Plan
Retirement and Pension Plans
Group Life
Others Products
Term Life
Savings Plan
Retirement and Pension Plans
Group Life
Scan to download
Claims
Claims
We'll be there! Whenever and however you'll need us.
Customer Support
Motor Claims
Health Claims
Customer Support
Scan to download
General
Life
General
Renewals
General
Life
Become an Agent
Resources
Resources
All the more reasons to feel the Digit simplicity in your life!
Exclusive Features
Tools & Calculators
Travel Guides
Transparency Report
Others
Exclusive Features
Tools & Calculators
Travel Guides
Transparency Report
Scan to download
Our WhatsApp number cannot be used for calls. This is a chat only number.
In India, every earning individual has to pay income tax as per the different slab rates. Similarly, when individuals purchase some goods or avail services, they have to pay tax on that product or service. It is here, the need to understand various types of tax and their difference arises.
This piece will discuss the difference between direct and indirect tax in a tabular form to help you understand every pointer easily.
Keep reading!
Refer to the table given below to distinguish between direct and indirect tax.
|
Point of Difference |
Direct Tax |
Indirect Tax |
|
Definition |
Individuals pay this amount directly to the Government, and others cannot transfer it. There are different acts that monitor this amount. |
End-use consumers of products, goods and services are liable to pay indirect tax. This variant is applicable for manufacturers and suppliers for the sale, import and purchase of goods. However, the accountability to pay this type of tax is passed on to consumers. |
|
Benefits |
The collection of direct tax occurs annually and is mostly deducted at the source, which makes it more cost-effective and reduces administrative costs. The tax amount is certain, which allows the Government to estimate revenue accurately. The collection of such taxes helps in controlling inflation and reduces inequalities. |
Consumers have to pay indirect tax only at the time of purchase. As such, tax collection is easy and convenient. Indirect tax payments ensure equitable contribution as taxpayers bear lower tax rates on basic items and higher rates on luxury goods. |
|
Imposition of Tax |
As the name suggests, this amount is imposed directly on the income of a taxpayer. |
The Government imposes this on taxpayers for the goods and services purchased or availed. |
|
Course of Payment |
Individuals can pay this directly to the Government. |
Individuals can pay this to the Government via an intermediary. |
|
Paying Entity |
Businesses and individuals pay such taxes. |
End-use consumers pay such taxes. |
|
Rate of Payment |
The Government decides the rate on the basis of income and profit. |
The Government decides the rate on the basis of products and end-use. |
|
Transferability of Payment |
Non-transferrable |
Transferrable |
|
Nature of Tax |
This type is progressive, meaning the rate increases with an individual’s income and profit. |
This type is regressive, meaning the rate remains the same, irrespective of an individual's income. |
Please try one more time!
