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A Tax is a compulsory contribution to the public authority to cover the cost of services rendered by the state for the general benefit of its society.

Taxes are generally compulsory contributions of wealth levied upon person, natural or corporate to defray the expense incurred in conferring a common benefit upon the residents of the state.

There are two types of Taxes.

Direct Tax
Direct tax is the tax that is paid by the person on whom it is levied. The burden of this tax cannot be shifted to any one. Normally these taxes are levied on income or wealth of a person. Income tax, wealth tax and gift tax are direct taxes.

Indirect Tax
If impact of tax falls on one person and incidence on other, tax is called indirect. These taxes are levied on the commodities. For example, excise duty or sales tax are indirect taxes. The liability for their payment is one the producers or seller but they are shifter to consumers by adding the value of these taxes to the prices of the commodities.