Answer / ameet narayankhedkar

Governments provide a lot of services for the country. And
those services are not free. In order to pay for those
services they charge everyone taxes.

Taxes is how we pay for all the services we demand from our
country. Even if you do not use them the idea is that we are
united as one nation and we all pay our share.

Indirect taxes are:

To raise government revenue - to effectively raise revenue,
indirect taxes can be imposed upon price inelastic products
so that demand does not fall and thus revenue is gained
without impacting firms.


· To discourage consumption - higher prices will discourage
some spending on all products with a PED value of more than
1.


· To alter the pattern of consumption - certain goods can be
made more price attractive through lower taxes while goods
which have high marginal social cost can be made expensive
through taxation; e.g. increasing fuel taxes on airlines to
better reflect the damage they cause.

Answer / murali krishna

Direct Taxes, as the name suggests, are taxes that are directly paid to the government by the taxpayer. It is a tax applied on individuals and organizations directly by the government e.g. income tax, corporation tax, wealth tax etc.

Indirect Taxes are applied on the manufacture or sale of goods and services. These are initially paid to the government by an intermediary, who then adds the amount of the tax paid to the value of the goods / services and passes on the total amount to the end user.

Examples of these are sales tax, service tax, excise duty etc

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