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Outline the advantages and disadvantages of direct taxes.

      

Outline the advantages and disadvantages of direct taxes.

  

Answers


Simon
Advantages.
• In direct tax, the taxpayer is certain as to the time, manner of payment and the amount to be paid.
• Direct taxes are economical in collection and also to the taxpayer.
• They are based on the canon of equitability such that the burden is equitably distributed as they are progressive in nature.
• Direct taxes are flexible and hence satisfy the canon of elasticity.
• Direct taxes are simple and easy to understand.
• Direct taxes helps to reduce income and wealth inequalities because of their progressive nature.
Disadvantages.
• Direct taxes pinch the taxpayer because they have to pay them directly out of their incomes or salaries.
• Corporation of taxes discourage those industries and firms which produce essential goods.
• Direct taxes discourage saving and investment.
• Direct taxes are not imposed on all income groups and the low income groups do not come under its preview.
• Direct taxes are inconvenient in nature because traders, businessmen and producers have to comply with a number of formalities relating to their sources of income and expenditure incurred in earning that income.
• Since direct taxes pinch the taxpayer, she tries to evade them by filling the wrong returns and even takes the help of income tax experts in doing this. Such taxes therefore cultivate dishonesty and the loss of revenue to the state.

skilled writter answered the question on May 3, 2018 at 17:30


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