Taxes are the major source of income for the government. Taxes are levied by the central government, state government and the local bodies.

These organisation spend  the income earned through  taxes for the welfare and development of the nation.

Broadly, taxes are of two kinds:

Direct taxes

As the name suggests these taxes are directly paid by the person on whom these taxes are levied. These taxes are levied on the income and wealth. Examples of direct taxes are – income taxes,  capital gains taxes, security transaction taxes, corporate taxes etc.

Indirect Taxes

Indirect taxes are levied on commodities i.e. on the production and sales etc. Custom duties, excise duties, sales tax, VAT, MODVAT, CENVAT,  service taxes , anti-dumping duties etc. are listed in indirect taxes.  Custom duty  is levied on the export and import of goods while excise duties are levied on production.

Other taxes are professional tax, municipal tax, entertainment tax, toll tax, stamp duty or registration tax.


Vat is levied on sale of goods and services when they are sold to the consumer.


GST is the latest tax and it is an indirect tax. It is a single tax on the supply of goods and services, from the manufactures to the consumers. It is expected that GST will bring uniformity of tax structures. It is simple to administer.