Indirect taxes is a type of tax which is collected and paid by the parties involved in the supply chain process of goods and services. While consumer takes the burden of the tax but the responsibility of collection and payment of taxes rests with supplier of goods and services. Various types of indirect taxes include VAT, Excise, Customs, Goods and Services Tax
Indirect taxes are defined by contrasting them with direct taxes. Indirect taxes can be defined as taxation on an individual or entity, which is ultimately paid for by another person. The body that collects the tax will then remit it to the government. But in the case of direct taxes, the person immediately paying the tax is the person that the government is seeking to tax
The most common example of an indirect tax is import duties. The duty is paid by the importer of a good at the time it enters the country. If the importer goes on to resell the good to a consumer, the cost of the duty, in effect, is hidden in the price that the consumer pays. The consumer is likely to be unaware of this, but he will nonetheless be indirectly paying the import duty.