ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Taxes are of two different types; direct tax and indirect tax. Taxes charged on income earned is called direct tax. Income tax is an excellent example of direct tax. On the other hand, an indirect tax is imposed by the government on a taxpayer for goods and services rendered.

Detailed explanation-2: -An income tax is a tax imposed on individuals or entities (taxpayers) in respect of the income or profits earned by them (commonly called taxable income). Income tax generally is computed as the product of a tax rate times the taxable income.

Detailed explanation-3: -What is a national consumption tax? Consumption tax is a tax on goods or services – what you spend rather than what you earn. In the U.S., consumption tax comes in the form of retail sales tax and excise tax (tax imposed on certain goods or activities, like alcohol or fuel).

Detailed explanation-4: -Retail Sales TaxThis is a tax charged on sale of retail goods and is directly paid by the final consumer. Manufacturers’ Sales TaxThis tax is levied on the manufacturers of certain goods. More items