A Comparative Study and Analysis of Direct and Indirect Tax in India

Abstract

Taxes are the foundation of any country's economy since they provide the funds required for welfare programs, infrastructure improvements, and public spending. Direct taxes and indirect taxes are the two main types of taxes in India. The justice principle is upheld when direct taxes are imposed on wealth and income and cannot be transferred to other people. Contrarily, indirect taxes are levied on products and services and are ultimately paid for by customers; as a result, they are frequently regressive. Both cash and labour equivalents—often but not always unpaid labour—can be used to pay taxes. India's tax system is very advanced. The central government, state governments, and local government entities make up the three primary tiers of India's tax structure. These local bodies typically consist of municipalities and local councils. The Indian Constitution grants the government the authority to tax both people and businesses. But according to the constitution, only the government has the ability to impose taxes. Any tax that is imposed must be supported by legislation that has been approved by the parliament or legislature. The direct and indirect taxes in the Indian setting are thoroughly examined in this paper. It examines their composition, traits, management systems, and relative advantages and disadvantages. The study ends by outlining present issues and offering legislative solutions for an improved, more just, and growth-oriented tax structure in India.