Indirect Tax

Indirect Tax – An indirect tax is a tax imposed on goods and services rather than directly on an individual’s income or profits. It is usually collected by an intermediary—such as a manufacturer, retailer, or service provider—who then remits it to the government. The final burden of the tax is borne by the end consumer, as it is included in the purchase price of the goods or services.

Examples of Indirect Taxes: Goods and Services Tax (GST) – levied on supply of goods and services. Value Added Tax (VAT) – applied at each stage of production or distribution. Excise Duty – imposed on the manufacture of specific goods. Customs Duty – charged on imported goods.

Example: When a consumer buys a smartphone for ₹50,000 including 18% GST, the GST component of ₹7,627 is collected by the retailer and paid to the government, making it an indirect tax.