Indirect Tax

What is Indirect Tax?

An indirect tax is a tax collected by an intermediary, such as a retailer, from the person who bears the ultimate economic burden of the tax, such as the consumer. Common examples include sales tax, VAT, and GST.

Why It Matters

• It is generally easier for governments to collect than direct taxes like income tax.

• Businesses act as tax collectors for the government, which adds to their administrative and compliance burden.

• Because it is applied to consumption, it can impact consumer spending patterns and overall economic activity.