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  1. Taxes are compulsory payments to government without expectation of direct returns or benefits to the taxpayer.
  2. A direct tax is really paid by the person on whom it is legally imposed.
  3. Merits of a direct tax include: certainty, elasticity, economical, progressiveness, political consciousness etc.
  4. Demerits of a direct tax include: inconvenience, limited coverage, tax evasion, arbitrariness, etc.
  5. An Indirect tax is imposed on one person and paid partly or wholly by another.
  6. Merits of an indirect tax include: convenience, elasticity, large coverage, social welfare, no possibility of evasion etc.
  7. Demerits of an indirect tax include: unjust, uncertain, shifting of burden, uneconomical, etc.
  8. The main features of Indian tax structure are:
(i) wide base and multiplicity of taxes,
(ii) elasticity,
(iii) changing proportion of direct and indirect taxes,
(iv) p
(v) intersectoral imbalance,
(vi) large tax evasion,
(vii) irrational tax rates,
(viii) complexity.
  1. Tax reforms introduced in India include:
(i) simplification of tax system,
(ii) rationalization of tax rates,
(iii) better tax compliance
(iv) larger coverage,
(v) shift in favour of direct taxes,
(vi) larger collection of tax revenue,
(vii) introduction of service tax, VAT, etc.

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