Question

What is indirect taxes collected in the transaction of goods & services

Answer 1

Indirect taxes are taxes that are not directly levied on the income or profits of individuals or businesses but are instead imposed on goods and services. These taxes are usually included in the price of the goods and services being sold, and consumers pay them indirectly when they purchase products. Here are some common types of indirect taxes:

1. **Value Added Tax (VAT)**: A tax added at each stage of the production and distribution process based on the value added at that stage. Consumers ultimately pay this tax when they purchase goods and services.

2. **Sales Tax**: A tax levied on the sale of goods and services, typically calculated as a percentage of the sale price. This tax is commonly collected at the point of sale.

3. **Excise Duty**: A tax imposed on specific goods, such as alcohol, tobacco, and fuel. This tax is often included in the price of the products.

4. **Customs Duties**: Taxes levied on the import and export of goods. These taxes are usually applied to control the volume of trade and protect domestic industries.

5. **Service Tax**: A tax imposed on certain services provided, which is typically included in the overall service fees charged to consumers.

6. **Goods and Services Tax (GST)**: A comprehensive indirect tax that has replaced various other indirect taxes in many countries. GST applies to the sale of goods and services and is collected at each stage of the supply chain.

These indirect taxes are a major source of revenue for governments. The burden of these taxes is ultimately borne by consumers, as they are included in the final price of goods and services.