Q.What is the meaning of indirect tax? Give two examples.

An indirect tax is levied on goods and services rather than on income; the seller pays it to the government but recovers it from the buyer, so the tax burden shifts to the final consumer.

In an indirect tax the impact (the person who first pays the tax to the government) and the incidence (the person who finally bears its burden) fall on two different persons. A manufacturer or trader deposits the tax with the government but adds it to the price of the goods, so the ultimate burden is passed on to the consumer who cannot shift it further. Such taxes are collected at the point of s …