Introduction 

Taxes can be defined as fees or charges that common people pay for availing of some benefit or for using a commodity or product. Some taxes are levied in a direct manner. Some are collected indirectly. Taxes are fees that are collected by the government or by a recognised institution. These taxes are collected from the citizens of a particular country. Taxes are levied on several kinds of things such as land, income, assets, commodities, roads, bridges, and more. These taxes help in the growing economic infrastructure of a country. There are two kinds of taxes, direct and indirect taxes. 

Kinds of Taxes

There are two main kinds of taxes that are collected from the citizens. 

• Indirect Tax
• Direct Tax

There are other miscellaneous taxes as well. 

Direct Tax

A direct tax is known as direct because it is collected directly from the people. There are no intermediaries involved. Citizens directly pay the taxes to the government or government representative. Legal entities or business organisations are also liable to pay direct tax. There are certain properties about a direct tax which is unique.

• Direct tax is non-transferable
• These are collected centrally by CBDT or Central Board of Direct Taxes
• These taxes are used as the main source for public infrastructure making fund
• There are 5 sub-categories under the bigger umbrella of direct tax which are corporate tax, income tax, prerequisite tax, capital tax, and tax on securities transactions

Examples of Direct Tax 

An example of direct tax can be seen through the five sub-categories of direct tax. 

• Capital Tax- These taxes are levied on capital earned by citizens and legal entities. These are generated from the selling of fixed assets like houses or properties. It can also be generated from various investments made. Capital tax is a wide-ranging category of direct tax. It can either be for a short period or it can be for a long period. 
• Income Tax- These taxes are directly levied on the income generated by a person or an organisation. The direct tax is levied annually. Any profits or money earned from any source is subjected to income tax payment. There are different slabs of taxes that cater to different criteria of income generation for people. These differentiated slabs help in the equitable distribution of tax responsibility amongst the general population. 
• Prerequisite Tax- These taxes are applied in official surroundings such as in businesses or organisations. These taxes have to be defined clearly as they are levied on distinct benefits or bonuses that an employee might receive from the employment. 
• Corporate Tax- Corporate tax is completely a business transaction. It is paid by businesses to the government. There are further categories within corporate taxes which are MAT or Minimum Alternative Tax, DDT or Dividend Distribution Tax, and FBT or Fringe Benefits Tax. 
• Tax on Securities Transactions- This kind of tax is also applied to profits earned from securities trading in the stock market. 

Indirect Tax and Direct Tax

Indirect Taxes are not collected by the government directly from the people. There are intermediaries present. These taxes are applied to commodities and services and the tax is owed to the seller or retailer. In India, there are not several taxes that are levied. GST or Goods and Services Tax is the only one levied. 

Conclusion

There are several kinds of direct taxes that are collected by the mandate of the government. In India, the constitution of the country provides for the necessity of collecting direct taxes. The government is responsible for collecting these direct taxes as it is used to strengthen the economic situation of the country and to promote welfare. All kinds of taxes fall in the Income Tax Act. Civic facilities and their upkeeps are done through the funding generated from taxes.