A tax that is paid directly by an individual or organization to the imposing entity. A taxpayer pays a direct tax to a government for different purposes, including real property tax, personal property tax, income tax or taxes on assets. Direct taxes are different from indirect taxes, where the tax is levied on one entity, such as a seller, and paid by another, such a sales tax paid by the buyer in a retail setting. A direct tax cannot be shifted to another individual or entity. The individual or organization upon which the tax is levied is responsible for the fulfillment of the tax payment. Indirect taxes, on the other hand, can be shifted from one taxpayer to another.
The government has to perform many functions in the discharge of its duties like infrastructure development, health, education, defense of the country, removal of poverty, maintenance of law and order, etc. To meet these requirements huge amount of capital is required. The government collects money from the public through a wide variety of sources i.e. fees, fines, surcharges, and taxes. Indirect Tax is a tax that increases the price of a good so that consumers are actually paying the tax by paying more for the products. The Ministry of Finance (Department of Revenue) through the Central Board of Excise and Customs (CBEC), an apex indirect tax authority, implements and administers excise (central excise), customs and service tax laws. Circulars, notifications, and clarifications issued by the CBEC supplement these indirect tax laws.