Which among the following is not a type of direct tax?
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Sales Tax
A direct tax is paid by the person on whom it is levied, who cannot pass it on to anyone else. An indirect tax is collected from a seller, but the seller adds it to the price, so its burden falls on the buyer.
Option (1) Sales Tax — an indirect tax: the shopkeeper collects it, but the buyer pays it in the price of the goods (it has now been merged into GST), so sales tax is the one that is not a direct tax.
Option (2) Property Tax — a direct tax: the owner of a house or plot pays it to the local body on the property owned.
Option (3) Stamp Duties — a direct tax: paid by the party to a property deal or document when it is registered; it is grouped with the taxes on property and capital transactions.
Option (4) Land Revenue — a direct tax: the landholder pays it to the state government on the land held.