Budget Explained: What is indirect tax?
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Budget 2024: Direct taxation and indirect taxation are the two categories of taxes. 'Direct Tax' is the one that is paid to the government directly. But do you know what is indirect tax?

Sales tax, value-added tax (VAT), and excise taxes are examples of indirect taxes.

Budget 2024: In India, paying taxes is mandatory for both individuals and corporate entities, regardless of their income or purchases of goods and services. Generally, a tax is a type of regular, obligatory payment made to the central and state governments. Direct taxation and indirect taxation are the two categories of taxes. 'Direct Tax' is the one that is paid to the government directly. But do you know what is indirect tax?

What is Indirect Tax?

Indirect tax is a type of tax that can be transferred to different entities. Usually, suppliers or manufacturers are the ones who have to pay it to the final customer. It is a tax imposed on products and services as opposed to earnings or profits. Sales tax, value-added tax (VAT), and excise taxes are examples of indirect taxes.

Categories under Indirect Tax

The various types of indirect taxes imposed in India are mentioned below:

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Service tax

It is a type of tax assessed by an organisation in exchange for the services it has provided. The Government of India is responsible for collecting and depositing the service tax.

Excise duty

The tax levied on any product or goods manufactured by a company in India is called Excise Duty.

Value Added Tax

Also known as VAT, this type of tax is levied on any product sold directly to the customer and is movable. VAT consists of Central Sales Tax, which is paid to the Government of India, State Central Sales Tax, which is paid to the respective State Governments.

Custom Duty

A customs duty is applied to the items that are imported to India. Occasionally, this tax is also levied on products that are exported from the country.

Stamp Duty

This is a tax levied on the transfer of any immovable property in India. Stamp tax is also applicable on all legal documents.

Entertainment Tax

The state government levies an entertainment tax on any goods or transactions involving entertainment. Purchasing any video game, tickets for a movie show, sports activities, arcades, amusement parks, etc., are some of the products on which entertainment tax is levied.