Describe the features of direct tax and indirect tax.

Tax is a compulsory payment made by the public towards the government. Taxes are of two types based on the shifting of tax burden.

When the burden of the tax is borne by the same person on whom tax is imposed, we call it direct tax. For example, land tax, personal income tax, corporate tax etc. Here the tax payer undertakes the burden of the tax.

When the burden of the tax is shifted from the person on whom it is imposed to another person, we call it indirect tax. For example, sales tax, service tax, central excise, value added tax, etc. Here the tax payer shift the burden to another person.