Giving reasons, classify the following into direct and indirect tax:
- Wealth tax.
- Value added tax.
- Entertainment tax.
- Income tax.
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- Wealth tax is a direct tax, as it is directly levied on the wealth of a person. The liability to pay and the burden of the tax falls on the same person, who thereby pays it.
- Value added tax is an indirect tax, as the liability to pay this tax is of the seller, but he shifts the burden of this tax on the buyer of the product.
- Entertainment Tax is an indirect tax, as the liability to pay this tax is of the industry dealing with entertainment.
- Income tax is a direct tax, as it is directly levied on the income of a person. The liability to pay and the burden of the tax falls on the same person, who thereby pays it.
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