Q.Distinguish between Direct Tax and Indirect Tax. State two examples of each.

Income tax in India has passed through five major legislative stages — the temporary 1860 Act introduced after the events of 1857, the more organised 1886 Act (which first classified income into heads), the 1918 Act, the genuinely comprehensive 1922 Act, and finally the Income Tax Act, 1961, in force from 1st April 1962 and administered today by the Central Board of Direct Taxes (CBDT). Every tax levied in the country, income tax included, falls under one of two structural pillars: a Direct Tax, where the person legally liable to pay the tax also bears its final burden (Income Tax, Corporate Tax, Capital Gains Tax), and an Indirect Tax, where the tax is collected from one person (a seller) but its burden is passed on to another (the buyer), as with GST and Customs Duty. Recognising which structural pillar a given tax belongs to — and why — is the foundation the rest of this course, and indeed the rest of the Income Tax Act, is built on.