GK Questions with Answer on Direct and Indirect Tax

What is a direct tax? A direct tax is a tax levied directly on a person or entity’s income or property, such as income tax or property tax.

What is an indirect tax? An indirect tax is a tax levied on the sale or use of goods and services, such as sales tax or value-added tax (VAT).

What is the difference between direct and indirect taxes? Direct taxes are levied directly on a person or entity’s income or property, while indirect taxes are levied on the sale or use of goods and services.

What is income tax? Income tax is a direct tax levied on a person or entity’s income earned during a tax year.

What is corporate tax? Corporate tax is a direct tax levied on the profits earned by corporations during a tax year.

What is property tax? Property tax is a direct tax levied on the value of real estate or other property owned by a person or entity.

What is capital gains tax? Capital gains tax is a direct tax levied on the profits earned from the sale of an asset, such as stocks, real estate, or artwork.

What is a gift tax? A gift tax is a direct tax levied on the value of gifts given by a person to another person or entity.

What is an estate tax? An estate tax is a direct tax levied on the value of an individual’s estate after they pass away.

What is a wealth tax? A wealth tax is a direct tax levied on a person or entity’s net worth or assets.

What is sales tax? Sales tax is an indirect tax levied on the sale of goods and services.

What is excise tax? Excise tax is an indirect tax levied on the sale of specific goods and services, such as tobacco, alcohol, or gasoline.

What is value-added tax (VAT)? Value-added tax (VAT) is an indirect tax levied on the value added to goods and services at each stage of production and distribution.

What is a customs duty? A customs duty is an indirect tax levied on imported goods.

What is an import tax? An import tax is an indirect tax levied on imported goods.

What is a tariff? A tariff is a tax on imported or exported goods.

What is a sin tax? A sin tax is a tax on products or activities that are considered harmful or undesirable, such as tobacco, alcohol, or gambling.

What is a payroll tax? A payroll tax is a tax levied on the wages or salaries paid to employees by their employers.

What is a social security tax? A social security tax is a payroll tax that funds the Social Security program, which provides retirement, disability, and survivor benefits to eligible individuals.

What is a Medicare tax? A Medicare tax is a payroll tax that funds the Medicare program, which provides health insurance to eligible individuals.

What is a state tax? A state tax is a tax levied by a state government on income, sales, property, or other sources of revenue.

What is a local tax? A local tax is a tax levied by a local government, such as a city or county, on income, sales, property, or other sources of revenue.

What is a franchise tax? A franchise tax is a tax levied on businesses for the right to operate as a corporation or partnership in a particular state.

What is a use tax? A use tax is an indirect tax levied on goods or services that were purchased out of state and used in-state.