What is Tax ?



What is Tax ?

  • Tax is nothing but it is a charge made by government on the goods, on travelling, medicine etc., that is a sort of income to the government. These money is used for developing purpose.
  • The purpose of taxation is to finance government expenditure.
  • One of the most important uses of taxes is to finance public goods and services, such as street lighting and street cleaning.
  • Since public goods and services do not allow a non-payer to be excluded, or allow exclusion by a consumer, there cannot be a market in the good or service, and so they need to be provided by the government or a quasi-government agency, which tend to finance themselves largely through taxes.
  • There are two types of tax,
    • Direct Tax
    • Indirect Tax

Direct Tax

  • If tax is levied directly on personal or corporate income, then it is a direct tax.

Indirect Tax

  • If tax is levied on the price of a good or service, then it is called an indirect tax.

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