Indirect tax is a tax which is not assessed on individual circumstances such as income tax. It is charged on the goods or services produced or rendered. Example of indirect tax are as follows- sales tax,Value added tax, Excise Duty and custom duty etc.When a producer produces something indirect tax in certain percentage is charged on the assessable value if the producer intends to sale . At the time of sale the seller recovers the tax from the customer as he has paid indirect tax at the time of purchase of raw material. The burden of indirect tax shifts to party to party like this compare to the direct tax where the the burden can no be shifted. Ex- say A has purchased imput at Rs 10 where excise duty is charged @2% i.e Rs 2.00. And A sold the goods at Rs 20 ,so the duty @2% comes Rs 4.00. Here A can adjust Rs 2.00 from the Rs 4.00 what he has recovered from the customer. Hope this will help you a bit.
