Merits and demerits of direct taxes?

Answer 1

Disadvantages of Direct Tax

Inconvenient:

Direct taxes are inconvenient because there are very complicated procedure for filling of returns and the taxes to be paid by the taxpayer in lump sum.

Disliking:

The taxpayers do not like direct taxes. They feel that their hard earned money is going to government.

Lump Sum:

Direct taxes are to be paid in lump sum in every year. So it is very difficult for taxpayer to pay a large so of money in one installment.

Evasion:

Direct tax can easily be evaded. The taxpayers often submit false statements of his income and thus tries to evade tax and the revenue of state may be reduced.

Reduction in Savings:

Due to direct taxes, rate of savings is reduced because a large part of income goes to the government.

Arbitrary:

The direct taxes are arbitrary as the state of taxes is changed arbitrary by the government. The rate of tax is changed from time to time.

Protest:

The tax payer may protest against any rise in the tax.

Category: Tax