Indirect Tax
Taxation Beginnerअप्रत्यक्ष कर
Definition
Indirect taxes are levied on goods and services rather than on income or profits. They can be passed on (shifted) to the consumer through higher prices. Since GST was introduced in 2017, most indirect taxes have been subsumed under GST. Remaining indirect taxes include customs duty, excise on petroleum and liquor, and stamp duty.
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Why Indirect Tax Matters
Understanding indirect tax is essential for anyone following government finances, preparing for competitive exams, or analysing India's economic policy. This concept directly affects how the government allocates resources and plans its fiscal strategy.
In the context of India's Union Budget 2026-27, with a total size of Rs 53.47 lakh crore, terms like indirect tax help citizens and analysts evaluate whether the government is on the right fiscal path. The numbers in the budget are only meaningful when one understands the underlying concepts.
For UPSC aspirants, indirect tax is frequently tested in both Prelims and Mains, particularly in Paper III (Economic Development). For CA and MBA students, this concept appears in public finance and macroeconomics courses.
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