According to the data released by the ministry of finance, indirect tax collections grew 39.1 per cent. Indirect collection stood at Rs 56,739 crore as against Rs 40,802 in the corresponding month last year. The rise was more on account of petroleum and diesel excise duty hike instead of a recovery on the manufacturing side and increase in the service tax rate to 14 per cent against 12.3 per cent from June. The excise duty was also increased marginally to 12.5 per cent from 12.36 per cent in the Budget.

The manufacturing recovery is yet to take off with the index of industrial production posting a muted growth of 2.7 per cent in May compared with 3.4 per cent in April.

Indirect Tax

Indirect taxes are the charges that are levied on goods and services. Some of the significant indirect taxes include Value Added Tax, Central  Sales Tax, Central Excise Duty, Customs Duty, stamp duties and expenditure tax.

Direct Tax

Direct Tax is a tax applied on individuals and organizations directly by the government e.g. income tax, corporation tax, wealth tax etc.

The primary difference between a direct and indirect tax is that direct tax is levied directly by the government from the taxpayer, but indirect taxes are collected by the intermediary.

Test Your Knowledge

Who is the current Chairman of Central Board of Direct Taxes (CBDT)?