Decoding Budget Terms: What Is Indirect Tax? Definition, Types, And More - Check Here

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New Delhi: In India, everyone, whether individuals or companies, has to pay taxes. Taxes are like regular payments we make to the government. There are two types of taxes - direct and indirect. Direct tax is what we pay directly to the government. But what about indirect tax?

What Is Indirect Tax?

Indirect tax is a kind of tax that can move from one place to another. Usually, the people who make or sell things pay this tax, and it eventually reaches the person who buys the product or service. It's a tax on things we buy, not on the money we earn. Examples of indirect taxes include sales tax, value-added tax (VAT), and excise taxes. ()

Categories of Indirect Tax in India

Service Tax

This tax is charged by a company when they provide a service. The Indian government collects and manages this tax. ()

Excise Duty

When a company in India makes something, they pay this tax on what they've produced.

Value Added Tax (VAT)

This tax is added to a product when it is sold to a customer. It includes Central Sales Tax paid to the Indian government and State Central Sales Tax paid to the respective state governments.

Custom Duty

This tax is put on things brought into India from other countries. Sometimes, it's also applied to things sent out of India.

Stamp Duty

This tax is paid when there's a change of ownership for land or property. It's also applied to legal documents.

Entertainment Tax

State governments charge this tax on things related to entertainment, like video games, movie tickets, sports events, arcades, and amusement parks.

Securities Transaction Tax

This tax is applied when people trade stocks on the Indian Stock Exchange.