Types of Taxes By Finschool5paisa

Further Anil explained to Ritika, what all types of Taxes exist.

Consider a situation in which different groups of people pay some amount of their income to a security company.

This company provides them with security and prevents robberies.

These people include: -- Farmers [ Manufacturers] -- Traders -- Doctors [Service Providers] -- Employees -- Exporters -- Importers

They paid the tax as follows: Manufacturers --> a % of their production known as Excise Tax. Traders --> a % of their sales known as Sales Tax.

Service Providers --> a % of their charge known as Service Tax. Employees --> a % of their salary known as Income Tax.

Exporter --> a % of their sales known as Export Tax. Importer --> a % of their sales known as Import Tax.

In order to indirectly transfer taxes from the buyers (that are Excise, Service & Sales Taxes) to the company, the manufactures and the service providers increased the price of their services and goods. Therefore, they are called Indirect Taxes.

But the salaried employees couldn't transfer the tax burden (i.e Income Tax) thus, they had to pay directly and these are known as Direct Tax.

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