Discussion
Which one of the following is an indirect tax?
Answer: B
The indirect tax is service tax.
An indirect tax is collected from one person but its burden is passed on to another. Service tax was charged by the service provider on the bill and paid by the customer, so its incidence shifted to the consumer. (In July 2017 it was subsumed into the Goods and Services Tax.)
Income tax, corporation tax and interest tax are direct taxes: they are levied on the income of the person or company that pays them, and the burden cannot be passed on.
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