What Is Direct Tax ?
Direct tax refers to a type of tax that is imposed on property, income or profit of the individuals. It should be paid directly to the government by the taxpayers because it cannot be passed to another person. Income tax, property tax, corporate tax, capital gain tax etc. are examples of direct tax.
Features Of Direct Tax
The main characteristics or features of direct tax can be described as follows:
1. Cannot Be Shifted
The burden of direct tax cannot be shifted to another person. Tax payer should bear the burden of tax.
2. Certainty
There is certainty in the amount of tax and time of payment. So, the tax payer knows how much tax to pay and when to be paid.
3. Elastic
It is productive in nature because amount of tax increases according to the increase in the income of tax payer.
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5. Educative
Direct tax educates the taxpayer or makes more conscious about tax liability. He/she also tries to be informed how the tax revenue is utilized by the nation.
6. Anti-inflationary
Government uses direct tax as a powerful instrument to control inflation by increasing tax rate.
7. Fairness
Another notable feature of direct tax is that it promotes equity and fairness because it is based on people's ability to pay.
8. Progressive
It is progressive in nature because the amount of tax increases as per the increase in the income of the individual. So, it helps to reduce income inequality.