Direct tax and Indirect Tax

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Direct Tax	Indirect Tax
If any particular tax is paid by a person and also its incidence is on that person, it is called direct tax like income tax	If any tax is paid by one person but its incidence is on some other person, it will be called indirect tax like Central GST, State GST, Integrated GST, UT GST etc. Its incidence is borne by the consumers who ultimately consume the product or the service, while the immediate liability to pay the tax may fall upon another person such as a manufacturer or provider of service or seller of goods.
e.g. If Mr. X has paid income tax of `5,00,000, it will be called direct tax because it is paid by Mr. X and also its incidence is borne by Mr. X.	e.g. If ABC Ltd. has manufactured a product and it is sold for Rs.20,00,000 and CGST plus SGST of Rs.2,00,000 has been recovered, the GST so collected shall be called indirect tax because the payment was made by a company but it is ultimately borne by the buyer.

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