Distinguish between the following concept: Direct tax and Indirect tax.

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Q. Distinguish between the following concept: Direct tax and Indirect tax.

Maharashtra MsbshseMaharashtra HSC (MSBSHSE) Board 2026Subjective· 2mImportance★★★★★

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A direct tax is paid and borne by the same person (no shifting); an indirect tax is paid by one person but its burden is passed on to another, usually the consumer.

The test that separates them is whether the impact (who pays) and the incidence (who ultimately bears) fall on the same person.

Basis	Direct Tax	Indirect Tax
Meaning	Levied on income or wealth of a person; paid directly to the government	Levied on goods and services; collected through the seller
Burden	Falls on the same person who pays; cannot be shifted	Can be shifted to another person (the consumer)
Impact and incidence	On the same person	On different persons
Examples	Income tax, corporate tax, wealth tax	GST, customs duty, excise duty

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Same / Similar Concept — real previous-year questions on the same or a closely similar concept, not this exact question.

CBSE 2023Set ANNUAL1 markMCQ
$Q. Find the odd word out: Non-tax revenue:$
(a) Fees
(b) Penalty
(c) Wealth tax
(d) Special levy
›Reveal solutionSolution
The odd word is Wealth tax — it is a form of tax revenue, whereas fees, penalty and special levy are all non-tax sources of public revenue.

Public revenue is broadly divided into tax revenue (compulsory payments with no direct quid pro quo, e.g. income tax, GST, wealth tax) and non-tax revenue (receipts from sources other than taxes):

Fees — charged for a specific government service (e.g. licence fee).

Penalty / fines — payments imposed for breaking a law or rule. …
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CBSE 2022Set ANNUAL1 mark

Q. Complete the correlation. Personal Income tax : ______ :: Goods and service tax (GST) : Indirect tax.

›Reveal solution

The missing term is Direct tax. Personal income tax is a direct tax because its money burden and impact fall on the same person and cannot be shifted to anyone else.

Taxes are divided into two types on the basis of shifting of the burden:

Type	Meaning	Examples
Direct tax	Impact and incidence fall on the same person; burden cannot be shifted	Personal income tax, corporate tax, wealth tax
Indirect tax	Levied on goods and services; burden can be shifted to the final consumer	GST, customs duty, excise duty
…

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Q.Distinguish between the following concept:
Direct tax and Indirect tax.

Concept understanding — Public Revenue — Tax and Non-Tax Revenue

Q.Distinguish between the following concept: Direct tax and Indirect tax.

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Q.Distinguish between the following concept:
Direct tax and Indirect tax.

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