Question

The Service Tax in India is
1. Direct Tax
2. Indirect Tax
3. Increasing Tax
4. Decreasing Tax

Answer 1

Correct Answer - Option 1 : Direct Tax

The Service Tax:

• Income Tax is a direct tax that is charged on an individual’s or entity’s income.
• The tax is calculated on the next taxable income of the entity based on the income slabs which are pre-defined by the IT Department.
• Income tax is a tax charged on the annual income earned by an individual.
• The amount of tax paid will depend on how much money you earn as income over a financial year. 

Hence, service tax in India is a direct tax.

Direct Taxes	Indirect Taxes
It is levied on income and activities conducted.	It is levied on products or services.
The burden of tax cannot be shifted in the case of direct tax.	The burden of tax shifted for indirect taxes.
It is paid directly by the person concerned.	It is paid by one person but he recovers the same from another person i.e. person who actually bears the tax ultimate consumer.
It is paid after the income reaches the hands of the taxpayer	It is paid before goods/service reaches the taxpayer.
Tax collection is difficult.	Tax collection is relatively easier.
Example Income tax, wealth tax, etc.	Example GST, excise duty custom duty sale tax service tax