BABU BANARSI DAS UNIVERSTY

SESSION: 2018-19

RESEARCH PROJECT
ON
DIRECT AND INDIRECT TAX
ASSIGNED BY ASSIGNOR
Mrs. SARITA SINGH NAME: ANUPAM SINGH
CLASS: BA; LLB (5th year)
UNIVERSITY ROLL NO.: 1140992009
 TITLE

DIRECT AND INDIRECT TAX

\
 ACKNOWLEDGEMENT
I would like to thank Ms. Sarita Singh Asst. Prof. of BBD
University for giving me an opportunity to do a research paper
on cyber law and its need in the present scenario. This research
gave me a vivid idea about the importance of direct and indirect
tax and its need . It was a very interesting and I have learnt a lot
regarding this topic.
 INDEX
S.No CONTENT MATTER Page
No.

1. Research methodology

2. Scope

3. Object

4. Hypothesis

7. Introduction
 RESEARCH METHODOLOGY

The research methodology involves on this topic is the systematic,

theoretical analysis and practical also.

The theoretical analysis comprises in this as a body of methods

and with the different branches of knowledge.
 SCOPE

Though the researcher has tried his level best to not to left any
stone untouched in doing his research work to highlight the
various aspects relating to the topic, but the topic being so vast
and so dynamic field of law and whose horizon and ambit cannot
be confined and narrowed down the research work has sought
with some of the unavoidable limitation.
 OBJECT

The objective of this seminar project is to know about the

definition of direct and indirect tax and its importance in India as
per the present scenario, compensation under writ jurisdiction
which give effects to various violation of human rights and
liabilities and to also know about contents and case study and also
to address the conclusion of it.
 HYPOTHESIS

Direct tax and indirect tax and its importance in India as per the
present scenario is very complex in its very logical. To cover this,
point to point there are very part to describe for its importance and
modern theory and concept of this topic.

It also involves the case study of some cases and judiciary taking
cognizance of writ petition.
 INTRODUCTION

Direct Tax
What is a Direct Tax?

A direct tax is paid directly by an individual or organization to the

imposing entity. A taxpayer, for example, pays direct taxes to the
government for different purposes, including real property tax,
personal property tax, income tax or taxes on assets.

Breaking Down Direct Tax

Direct taxes are based on the ability-to-pay principle. This principle

is an economic term that states that those who have more resources
or earn higher income should pay more taxes. The ability to pay
taxes is a way to redistribute the wealth of a nation. Direct taxes
cannot be passed onto a different person or entity; the individual or
organization upon which the tax is levied is responsible for the
fulfillment of the full tax payment.

Direct taxes, especially in a tax bracket system, can become a

disincentive to work hard and earn more money, because the more
money a person earns, the more taxes he pays.

A direct tax is the opposite of an indirect tax, where the tax is levied
on one entity, such as a seller, and paid by another, such as a sales
tax paid by the buyer in a retail setting. Both taxes are equally
important to the revenue generated by a government and, therefore,
to the economy.
The History of Direct Taxes

The modern distinction between direct taxes and indirect taxes

came about with the passing of the 16th Amendment in 1913. Prior
to the 16th Amendment, tax law in the United States was written so
that any direct taxes were required to be directly apportioned to the
population. For example, a state with 75 percent of the population
in relation to another state would only be required to pay direct
taxes equal to 75 percent of the larger state.

This antiquated verbiage made it so many direct taxes, such as

personal income tax, could not be imposed by the federal
government due to apportionment requirements. However, the
passing of the 16th Amendment changed the tax code and allowed
for the levying of numerous direct and indirect taxes.

An Example of Direct Taxes

Corporate taxes are a good example of direct taxes. If, for example, a
manufacturing company operates with $1 million in revenue,
$500,000 in cost of goods sold (COGS) and $100,000 in total
operating costs, its earnings before interest, taxes, depreciation, and
amortization (EBITDA) would be $400,000. If the company had no
debt, depreciation or amortization, and had a corporate tax rate of
35 percent, its direct tax would be $140,000, derived as: ($400,000
x 0.35) = $140,000.

Additionally, a person's income tax is an example of a direct tax. If a

person makes $100,000 in a year and owes $40,000 in taxes, the
$40,000 would be a direct tax.
Other Types of Direct Taxes

The corporate tax is another form of a direct tax. This is the tax that
corporations and other businesses must pay to the government on
the profits they earn. However, partnerships and sole
proprietorships do not pay corporate taxes. The corporate tax in the
U.S. is separate from income tax.

Another type of direct tax is the property tax, paid by the owner of a
property. These are typically collected by local governments and are
based on the assessed value of a property.

Other types of direct taxes include estate taxes, gift taxes, value-
added taxes (VAT) and sin taxes.
 Indirect Tax

What is an Indirect Tax

An indirect tax is collected by one entity in the supply chain (usually
a producer or retailer) and paid to the government, but it is passed
on to the consumer as part of the purchase price of a good or
service. The consumer is ultimately paying the tax by paying more
for the product.

BREAKING DOWN Indirect Tax

Indirect taxes are defined by contrasting them with direct taxes.

Indirect taxes can be defined as taxation on an individual or entity,
which is ultimately paid for by another person. The body that
collects the tax will then remit it to the government. But in the case
of direct taxes, the person immediately paying the tax is the person
that the government is seeking to tax.

Import duties, fuel, liquor and cigarette taxes are all considered
examples of indirect taxes. By contrast, income tax is the clearest
example of a direct tax, since the person earning the income is the
one immediately paying the tax. Admission fees to a national park is
another clear example of direct taxation.

Some indirect taxes are also referred to as consumption taxes, such

as a value-added tax (VAT).
Examples of Indirect Taxes

The most common example of an indirect tax is import duties. The

duty is paid by the importer of a good at the time it enters the
country. If the importer goes on to resell the good to a consumer,
the cost of the duty, in effect, is hidden in the price that the
consumer pays. The consumer is likely to be unaware of this, but he
will nonetheless be indirectly paying the import duty.

Essentially, any taxes or fees imposed by the government at the

manufacturing or production level is an indirect tax. In recent years,
many countries have imposed fees on carbon emissions to
manufacturers. These are indirect taxes, since their costs are passed
along to consumers.

Sales taxes can be direct or indirect. If they are imposed only on the
final supply to a consumer, they are direct. If they are imposed as
value-added taxes along the production process, then they are
indirect.

Regressive Nature of Indirect Taxes

Indirect taxes are commonly used and imposed by the
government in order to generate revenue. They are essentially fees
that are levied equally upon taxpayers, no matter their income, so
rich or poor, everyone has to pay them. But many consider them to
be regressive taxes as they can bear a heavy burden on people with
lower incomes who end up paying the same amount of tax as those
who make a higher income. For example, the import duty on a
television from Japan will be the same amount, no matter the
income of the consumer purchasing the television. And because this
levy has nothing to do with a person's income, that means someone
who earns $25,000 a year will have to pay the same duty on the
same television as someone who earns $150,000 — clearly, a bigger
burden on the former.

There are also concerns that indirect taxes can be used to further a
particular government policy by taxing certain industries and not
others. For this reason, some economists argue that indirect taxes
lead to an inefficient marketplace and alter market prices from their
equilibrium price.
BIBLIOGRAPHY
PRIMARY SECONDARY
 www.blog.ipleaders.in  GST norms
 www.legalserviceindia.com  Income tax Act,1961
 www.lawnotes.in.  --------------
 www.scribd.com.  ---------------