by Direct Taxes
Direct taxes are taxes that are imposed directly on the income, profits, wealth, or property of individuals and organizations. The person who is liable to pay the tax bears the entire burden and cannot transfer it to another person. These taxes are collected directly by the government from the taxpayer. Direct taxes are based on the principle of ability to pay, meaning that individuals with higher incomes generally pay more taxes. They are an important source of government revenue and help in reducing income inequality. Examples of direct taxes include Income Tax, Corporate Tax, Capital Gains Tax, and Property Tax. Direct taxation promotes fairness, transparency, and accountability in the tax system.
Examples of Direct Taxes
- Income Tax
Tax imposed on the income earned by individuals and entities.
- Corporate Tax
Tax levied on the profits earned by companies and corporations.
- Capital Gains Tax
Tax charged on profits arising from the sale of capital assets.
- Property Tax
Tax imposed on ownership of land, buildings, and other properties.
- Wealth Tax (where applicable)
Tax levied on the net wealth of individuals or entities.
Features of Direct Taxes
- Burden Cannot Be Shifted
The burden of direct tax falls on the same person who is legally responsible for paying it. The taxpayer cannot transfer the tax liability to another individual or entity. For example, an employee paying income tax bears the burden personally. This feature distinguishes direct taxes from indirect taxes, where the burden can be passed on to consumers. Since the impact and incidence of the tax remain on the same person, direct taxes provide greater transparency and accountability in taxation. This characteristic also helps policymakers identify who is contributing to government revenue and ensures a fair distribution of tax responsibility.
- Levied on Income, Wealth, and Profits
Direct taxes are imposed on a person’s income, wealth, profits, or property rather than on goods and services. Individuals, companies, and other entities pay taxes according to their earnings or assets. The tax amount is generally calculated based on financial capacity, ensuring that those with greater resources contribute more. This approach aligns with the principle of equity in taxation. Since direct taxes are linked to income and wealth generation, they serve as an effective tool for mobilizing government revenue while maintaining fairness. Examples include income tax on salaries and corporate tax on business profits.
- Paid Directly to the Government
Direct taxes are paid directly by taxpayers to the government without involving intermediaries. Taxpayers either deposit the tax themselves or it is deducted at source and credited to the government account. This direct relationship between the taxpayer and the government promotes transparency in tax collection. It also allows tax authorities to maintain accurate records and monitor compliance efficiently. The system helps ensure that tax revenue reaches the government without unnecessary delays. Consequently, direct taxes contribute significantly to fiscal management and provide governments with a dependable source of revenue.
- Progressive in Nature
Most direct taxes follow a progressive structure, meaning that tax rates increase as income levels rise. Individuals with higher earnings pay a larger proportion of their income as tax compared to lower-income groups. This feature promotes social justice and helps reduce economic inequality. Progressive taxation ensures that the burden of taxation is distributed according to the taxpayer’s ability to pay. It also provides governments with additional resources to fund welfare programs and development initiatives. Therefore, the progressive nature of direct taxes plays a crucial role in achieving equitable economic growth and social balance.
- Based on Ability to Pay
Direct taxes are designed according to the taxpayer’s financial capacity. People with higher incomes, profits, or wealth contribute more, while those with lower incomes pay less or may even be exempt from taxation. This principle ensures fairness and prevents excessive burden on economically weaker sections. By considering the taxpayer’s ability to pay, direct taxes promote equity and social welfare. Governments use this approach to create a balanced tax system that supports economic development while protecting vulnerable groups. As a result, direct taxation is often regarded as a fair and just method of raising public revenue.
- Certainty and Transparency
Direct taxes offer certainty regarding the amount payable, the time of payment, and the method of collection. Tax laws clearly specify tax rates, filing procedures, due dates, and compliance requirements. Taxpayers know their obligations in advance, reducing confusion and uncertainty. This transparency improves trust between taxpayers and the government. It also helps businesses and individuals plan their finances effectively. A clear and predictable tax system encourages voluntary compliance and minimizes disputes. Therefore, certainty and transparency are important characteristics that enhance the efficiency and effectiveness of direct taxation.
- Important Source of Government Revenue
Direct taxes contribute significantly to government revenue and support public expenditure. Funds collected through direct taxation are used for infrastructure development, education, healthcare, defense, and welfare programs. Since direct taxes are generally linked to income and profits, they provide substantial revenue, particularly during periods of economic growth. Governments rely on these taxes to finance developmental activities and maintain essential public services. The steady flow of revenue from direct taxes helps ensure fiscal stability and enables governments to meet their social and economic responsibilities effectively.
- Instrument of Economic and Social Policy
Direct taxes are not only a source of revenue but also an important tool for implementing economic and social policies. Governments use tax rates, exemptions, deductions, and incentives to influence economic behavior. Tax benefits may encourage savings, investments, research activities, and industrial development. Similarly, higher taxes on certain income groups can help reduce wealth disparities. Through direct taxation, governments can promote economic growth, social welfare, and balanced development. Thus, direct taxes play a dual role by generating revenue and supporting broader policy objectives.
Advantages of Direct Taxes
- Promotes Economic Equality
Direct taxes help reduce the gap between rich and poor by imposing higher tax rates on individuals and organizations with greater incomes. This progressive taxation system ensures that those who earn more contribute a larger share to government revenue. The funds collected are often used for welfare schemes, subsidies, healthcare, and education programs that benefit economically weaker sections of society. As a result, direct taxes support the redistribution of income and wealth, leading to greater social justice and economic balance. Therefore, direct taxation plays an important role in promoting equality and inclusive economic development.
- Based on Ability to Pay
One of the greatest advantages of direct taxes is that they are levied according to the taxpayer’s ability to pay. Individuals with higher incomes bear a greater tax burden, while those with lower incomes pay less or may receive exemptions. This ensures fairness in the tax system and prevents excessive hardship on weaker sections of society. By linking tax liability to income and financial capacity, direct taxes promote equity and justice. Such a system encourages public acceptance of taxation and supports the principle that citizens should contribute according to their economic strength.
- Provides Stable Revenue
Direct taxes provide a reliable and stable source of revenue to the government. Taxes such as income tax and corporate tax are collected regularly and contribute significantly to public finances. Since income and profits are generated continuously in an economy, governments can depend on direct tax collections to meet recurring expenditures. Stable revenue enables governments to plan and implement development projects effectively. It also helps maintain essential public services such as healthcare, education, defense, and infrastructure. Therefore, direct taxes play a crucial role in ensuring fiscal stability and supporting long-term economic growth.
- Ensures Transparency
Direct taxes are transparent because taxpayers know the exact amount they are required to pay and the purpose of the tax. Tax laws clearly specify rates, procedures, due dates, and compliance requirements. This transparency reduces confusion and promotes trust between taxpayers and the government. Unlike indirect taxes, which are often embedded in the prices of goods and services, direct taxes are visible to taxpayers. As a result, individuals become more aware of their tax obligations and contributions to public finances. Transparency also enhances accountability and encourages responsible tax administration.
- Helps Control Inflation
Direct taxes can be used as an effective tool to control inflation in the economy. During periods of rising prices and excessive demand, governments may increase direct tax rates to reduce disposable income and limit consumer spending. This helps moderate demand and stabilize prices. By influencing purchasing power, direct taxation becomes an important instrument of fiscal policy. It assists governments in maintaining economic stability and preventing uncontrolled inflation. Therefore, direct taxes not only generate revenue but also contribute to the effective management of economic conditions and overall financial discipline.
- Supports Social Welfare
Revenue generated through direct taxes is extensively used to finance social welfare programs and public services. Governments utilize tax collections to provide education, healthcare, housing, sanitation, and social security benefits to citizens. Special welfare schemes for economically weaker sections are also funded through tax revenue. These initiatives improve living standards and promote social development. Since direct taxes collect more revenue from higher-income groups, they help redistribute resources to those in need. Consequently, direct taxation plays a vital role in strengthening social welfare and enhancing the quality of life for the population.
- Flexible and Adjustable
Direct taxes offer flexibility because governments can easily modify tax rates, exemptions, deductions, and rebates according to changing economic conditions. During economic downturns, tax relief can be provided to stimulate growth and investment. Similarly, tax rates can be increased when additional revenue is required. This adaptability makes direct taxes an effective instrument of fiscal policy. Governments can use them to influence economic activities and achieve specific policy objectives. The flexibility of direct taxation enables authorities to respond quickly to economic challenges and changing financial needs.
- Encourages Responsible Citizenship
Direct taxes promote a sense of responsibility among citizens by making them aware of their contribution to national development. Taxpayers understand that their payments help fund public services and government programs. This awareness encourages civic participation and strengthens the relationship between citizens and the government. Individuals who pay direct taxes often demand greater accountability and efficiency in public spending, leading to better governance. Furthermore, tax compliance fosters financial discipline and respect for the law. Thus, direct taxation contributes to the development of responsible and informed citizens who actively support national progress.
Disadvantages of Direct Taxes
- Possibility of Tax Evasion
One of the major disadvantages of direct taxes is the possibility of tax evasion. Some taxpayers may deliberately conceal income, maintain false accounts, or provide inaccurate information to reduce their tax liability. Such practices result in revenue loss for the government and create inequality among taxpayers. Tax evasion also increases the administrative burden on tax authorities, which must spend additional resources on audits and investigations. Despite strict laws and penalties, completely eliminating tax evasion remains difficult. Therefore, the risk of non-compliance is a significant drawback of the direct taxation system.
- Complex Administrative Procedures
Direct taxes often involve complicated procedures related to assessment, filing, verification, and payment. Taxpayers must understand various rules, exemptions, deductions, and compliance requirements. Businesses and individuals may need professional assistance from accountants or tax consultants to fulfill their obligations accurately. The government also incurs substantial costs in administering and monitoring tax collection. Frequent changes in tax laws can further increase complexity and confusion. As a result, the administrative burden associated with direct taxes can make the system difficult to manage for both taxpayers and tax authorities.
- High Compliance Costs
Compliance with direct tax regulations can be costly for taxpayers. Individuals and businesses often spend money on maintaining records, preparing tax returns, hiring tax professionals, and meeting legal requirements. Large organizations may need dedicated tax departments to ensure compliance with complex tax laws. These costs add to the financial burden beyond the actual tax amount paid. For small businesses and self-employed individuals, compliance expenses can be particularly significant. Consequently, the high cost of complying with direct tax regulations is considered an important disadvantage of direct taxation.
- May Discourage Savings
High rates of direct taxation can reduce the disposable income available to individuals for saving and investment. When a substantial portion of earnings is paid as tax, people may have fewer resources to set aside for future needs. Reduced savings can affect capital formation and limit the funds available for economic growth. Individuals may also feel less motivated to increase earnings if higher income results in higher tax liability. Therefore, excessive direct taxation may discourage savings and negatively impact long-term financial planning and economic development.
- Can Reduce Investment Incentives
Direct taxes, particularly high income and corporate tax rates, may discourage investment activities. Entrepreneurs and businesses may hesitate to expand operations if a large share of profits is taxed. Investors may also seek alternative opportunities with lower tax burdens. Reduced investment can affect production, employment, and overall economic growth. While governments often provide tax incentives to encourage investment, high direct tax rates can still create disincentives. Therefore, direct taxation may sometimes hinder business expansion and entrepreneurial initiatives, especially when tax rates are perceived as excessive.
- Limited Tax Base
Direct taxes are generally imposed only on individuals and organizations that earn taxable income or possess taxable wealth. As a result, a significant portion of the population may fall outside the tax net, especially in economies with large informal sectors. This limited coverage restricts the government’s ability to generate revenue from a broader population base. The burden of taxation may become concentrated on a smaller group of taxpayers, leading to dissatisfaction and reduced compliance. Hence, the narrow tax base is a major limitation of direct taxation systems.
- Burden Felt Directly by Taxpayers
Unlike indirect taxes, where the burden is often hidden in the price of goods and services, direct taxes are paid directly by taxpayers. This makes the financial burden more noticeable and sometimes unpopular. Individuals may feel dissatisfied when a substantial portion of their income is deducted as tax. The direct impact can reduce willingness to comply voluntarily and may create resistance to tax increases. Since taxpayers are fully aware of the amount paid, direct taxation often faces greater public scrutiny and criticism compared to indirect taxation.
- Difficult Assessment Process
Determining the correct amount of direct tax can be challenging because it requires accurate assessment of income, profits, deductions, and exemptions. Tax authorities must verify financial records and ensure compliance with tax laws. Complex income sources, business transactions, and financial arrangements can make assessments time-consuming and difficult. Errors in reporting or interpretation may lead to disputes between taxpayers and authorities. The assessment process also demands significant administrative resources. Therefore, the complexity involved in calculating and assessing direct taxes is a notable disadvantage of the system.
Indirect Tax
Indirect tax is a tax imposed on the production, sale, purchase, or consumption of goods and services rather than directly on the income or wealth of individuals. The burden of the tax can be shifted from the person who pays it to the government to another person, usually the final consumer. In this system, the seller or service provider collects the tax from customers and deposits it with the government. Therefore, the person who bears the tax burden and the person who remits the tax are different. Examples of indirect taxes include Goods and Services Tax (GST), customs duty, and excise duty. Indirect taxes are widely used because they generate substantial revenue and are relatively easy to administer and collect.
Examples of Indirect Taxes
- Goods and Services Tax (GST)
A comprehensive tax levied on the supply of goods and services throughout India.
- Customs Duty
A tax imposed on goods imported into or exported from a country.
- Excise Duty (largely subsumed under GST except on specified goods)
A tax imposed on the manufacture of certain goods.
- Entertainment Tax (subsumed under GST in most cases)
A tax previously levied on entertainment activities and events.
- Service Tax (subsumed under GST)
A tax previously imposed on the provision of services.
Features of Indirect Tax
- Burden Can Be Shifted
The most distinctive feature of an indirect tax is that its burden can be shifted from one person to another. The person who initially pays the tax to the government, such as a manufacturer, wholesaler, retailer, or service provider, transfers the tax burden to the final consumer through the selling price. Thus, the incidence and impact of the tax fall on different persons. This shifting mechanism makes indirect taxes different from direct taxes. Since consumers ultimately bear the burden while businesses collect the tax, indirect taxation becomes an effective and practical method of revenue collection.
- Levied on Goods and Services
Indirect taxes are imposed on goods and services rather than on income or wealth. They are charged at different stages such as production, sale, distribution, import, export, or consumption. Every time taxable goods or services are supplied, tax may be collected according to applicable laws. Consumers contribute to government revenue whenever they purchase taxable products. This broad applicability ensures that indirect taxes generate significant income for the government. Since goods and services are consumed by a large section of society, indirect taxation becomes an important source of public revenue.
- Included in the Price of Goods and Services
Indirect taxes are generally included in the selling price of goods and services. Consumers often pay the tax as part of the purchase price without making a separate payment to the government. For example, GST is added to the value of goods and services and collected by the seller. This feature simplifies tax collection because consumers do not need to calculate or remit the tax independently. It also ensures smooth revenue collection for the government. The inclusion of tax in prices makes indirect taxes convenient for both taxpayers and tax administrators.
- Broad Tax Base
Indirect taxes have a broad tax base because they apply to a wide range of goods and services consumed by the public. Since almost every individual purchases goods or uses services, a large number of people contribute to tax revenue. This extensive coverage enables governments to collect substantial funds without relying solely on a limited group of taxpayers. A broad tax base also helps distribute the tax burden across society. Consequently, indirect taxes provide a stable and continuous source of income, supporting government expenditure and national development activities.
- Easy to Collect and Administer
Indirect taxes are relatively easy to collect because they are gathered through manufacturers, wholesalers, retailers, importers, and service providers. Instead of collecting tax from every individual consumer, the government relies on registered businesses to collect and remit taxes. This reduces administrative complexity and collection costs. Modern tax systems such as GST further streamline the process through digital filing and payment mechanisms. The ease of administration improves compliance and efficiency. Therefore, indirect taxes are considered a practical and effective method for raising government revenue on a large scale.
- Continuous Source of Revenue
Indirect taxes provide governments with a continuous and regular flow of revenue because goods and services are purchased every day. Every taxable transaction contributes to government income, ensuring steady revenue collection throughout the year. Unlike some direct taxes that may be collected periodically, indirect taxes generate funds whenever economic activity occurs. This consistent income supports government operations, infrastructure projects, welfare programs, and public services. The continuous nature of indirect tax revenue makes it an essential component of fiscal management and economic planning for governments.
- Difficult to Evade
Indirect taxes are generally difficult to evade because they are collected at various stages of the supply chain. Businesses are required to maintain records, issue invoices, and comply with tax regulations. Modern systems such as GST use digital tracking and input tax credit mechanisms that improve transparency and reduce opportunities for tax evasion. Since the tax is embedded in commercial transactions, consumers automatically pay it when purchasing goods or services. This feature enhances compliance and ensures efficient revenue collection. Consequently, indirect taxes often result in lower levels of tax evasion compared to some direct taxes.
- Influences Consumer Behavior
Indirect taxes can be used as an effective tool to influence consumer behavior and achieve policy objectives. Governments often impose higher taxes on products such as tobacco, alcohol, and luxury goods to discourage excessive consumption. Similarly, lower tax rates may be applied to essential goods to make them more affordable. By affecting the prices of products and services, indirect taxes influence purchasing decisions and consumption patterns. This feature allows governments to promote public health, environmental sustainability, and social welfare while simultaneously generating revenue. Thus, indirect taxation serves both fiscal and regulatory purposes.
Advantages of Indirect Taxes
- Convenient to Pay
Indirect taxes are highly convenient for taxpayers because they are paid gradually while purchasing goods and services. Consumers do not have to make separate arrangements for tax payments or file returns solely for paying such taxes. The tax amount is included in the price of the product or service and is collected by the seller on behalf of the government. This method reduces the burden of paying a large amount at one time. Since payment is linked to consumption, taxpayers contribute according to their spending habits. Therefore, indirect taxes provide a simple and convenient method of tax collection.
- Wide Coverage of Taxpayers
One of the major advantages of indirect taxes is their broad coverage. Every person who purchases taxable goods or services contributes to government revenue, regardless of income level. Unlike direct taxes, which apply only to those earning taxable income, indirect taxes reach a much larger section of society. This extensive coverage helps governments generate substantial revenue from numerous transactions. The burden is spread across millions of consumers, making tax collection more effective. As a result, indirect taxes ensure a broad-based contribution to public finances and reduce dependence on a limited number of taxpayers.
- Difficult to Evade
Indirect taxes are generally difficult to evade because they are collected during commercial transactions. Consumers automatically pay the tax when purchasing goods or services, and businesses are responsible for remitting it to the government. Modern systems such as GST require proper invoicing, record maintenance, and digital reporting, which improve transparency and accountability. Since tax is embedded in the transaction process, opportunities for evasion are reduced. Governments can also monitor business activities more effectively through electronic systems. Consequently, indirect taxes help improve compliance and ensure a steady flow of revenue.
- Generates Large Revenue
Indirect taxes are a significant source of government revenue because they apply to a vast range of goods and services consumed daily. Since economic activities occur continuously, governments receive regular tax collections from numerous transactions. The broad tax base and frequent collection process enable indirect taxes to generate substantial income. This revenue is used to fund public services, welfare programs, infrastructure development, and administrative expenses. As consumption grows with economic expansion, indirect tax collections also increase. Therefore, indirect taxation plays a vital role in supporting government finances and national development.
- Encourages Savings
Indirect taxes are imposed on expenditure rather than income. Since taxes are paid only when money is spent on goods and services, individuals may be encouraged to save a larger portion of their income. People who spend less pay less indirect tax, while those who consume more contribute more. This feature promotes financial discipline and can lead to increased savings in the economy. Higher savings contribute to capital formation, which supports investment and economic growth. Thus, indirect taxation can positively influence personal financial behavior and contribute to long-term economic development.
- Flexible Instrument of Fiscal Policy
Indirect taxes provide flexibility to governments in managing economic conditions. Tax rates can be increased or decreased depending on revenue requirements and policy objectives. For example, higher taxes may be imposed on luxury goods to raise revenue, while lower taxes can be applied to essential goods to support consumers. Governments can quickly modify indirect tax structures to address inflation, encourage consumption, or stimulate economic activity. This flexibility makes indirect taxation an effective tool of fiscal policy. It enables policymakers to respond efficiently to changing economic circumstances and developmental needs.
- Helps Regulate Consumption
Indirect taxes can be used to influence consumer behavior by making certain goods more or less expensive. Governments often impose higher taxes on products such as tobacco, alcohol, and environmentally harmful goods to discourage excessive consumption. At the same time, essential goods may be taxed at lower rates to make them affordable. This regulatory function helps achieve social and economic objectives. By influencing purchasing decisions, indirect taxes contribute to public health, environmental protection, and responsible consumption. Therefore, indirect taxation serves not only as a revenue source but also as a policy instrument.
- Easy Collection and Administration
Indirect taxes are easier to collect and administer compared to many direct taxes. The government collects taxes through businesses such as manufacturers, wholesalers, retailers, and service providers rather than directly from every consumer. This reduces administrative costs and simplifies enforcement. Modern tax systems, including GST, have further improved efficiency through online registration, filing, and payment facilities. Businesses act as tax collection agents, making the process systematic and organized. As a result, indirect taxes enable governments to collect revenue effectively while minimizing administrative challenges and compliance burdens.
Disadvantages of Indirect Taxes
- Regressive in Nature
One of the major disadvantages of indirect taxes is that they are regressive in nature. The same rate of tax is charged on goods and services regardless of the consumer’s income level. As a result, low-income individuals spend a larger proportion of their income on taxes compared to wealthy individuals. This creates an unequal burden on economically weaker sections of society. Since indirect taxes do not consider the taxpayer’s ability to pay, they may increase financial hardship for poor households. Therefore, the regressive nature of indirect taxation is often criticized for reducing economic equity and social justice.
- Increases Cost of Living
Indirect taxes increase the prices of goods and services because the tax amount is included in the selling price. Consumers ultimately bear the burden of the tax through higher expenditure on daily necessities and other products. When tax rates rise, the cost of living also increases, affecting household budgets. This impact is especially severe for low- and middle-income families that spend a significant portion of their earnings on consumption. Higher living costs may reduce purchasing power and overall welfare. Thus, indirect taxation can create financial pressure on consumers and raise living expenses.
- Inflationary Effect
Indirect taxes can contribute to inflation by increasing the prices of goods and services. When businesses pay higher taxes, they often transfer the additional cost to consumers through increased selling prices. As prices rise across various sectors, the overall price level in the economy may increase. This inflationary effect reduces the purchasing power of money and affects consumers’ standard of living. Higher prices may also increase production costs and create economic inefficiencies. Therefore, excessive reliance on indirect taxation can sometimes contribute to inflation and economic instability.
- Lack of Equity
Indirect taxes do not follow the principle of ability to pay. Every consumer purchasing a taxable product pays the same amount of tax regardless of income or financial status. A wealthy person and a poor person buying the same product pay identical tax, even though their economic capacities differ significantly. This lack of differentiation makes indirect taxation less equitable than direct taxation. Since the burden is not distributed according to financial strength, indirect taxes may widen economic disparities. Consequently, concerns about fairness and equity are common criticisms of indirect tax systems.
- Hidden Tax Burden
Many consumers are unaware of the exact amount of indirect tax included in the price of goods and services. Since the tax is embedded in the purchase price, the burden often remains hidden from the buyer. This lack of visibility may reduce public awareness of tax contributions and government revenue collection. Consumers may not realize how much they are paying in taxes over time. The hidden nature of indirect taxes can also reduce transparency in the taxation system. Therefore, indirect taxation is sometimes criticized for concealing the actual tax burden from taxpayers.
- May Reduce Demand
High indirect tax rates can make goods and services more expensive, leading to a decline in consumer demand. When prices increase significantly, consumers may reduce purchases or seek cheaper alternatives. Lower demand can negatively affect businesses, production levels, and employment opportunities. Industries producing highly taxed goods may experience reduced sales and profitability. In some cases, excessive taxation can discourage economic activity and slow growth. Therefore, indirect taxes must be imposed carefully to avoid harming consumer demand and overall market performance.
- Burden on Essential Goods
If indirect taxes are imposed on essential commodities such as food, medicines, fuel, or basic household items, they can adversely affect the standard of living of ordinary people. Since these goods are necessary for daily life, consumers cannot easily reduce their consumption. As a result, even small increases in tax rates can significantly impact household budgets. Lower-income groups are particularly affected because they spend a larger share of their income on necessities. Therefore, taxation of essential goods may create social and economic difficulties for vulnerable sections of society.
- Possibility of Cascading Effect
Before the introduction of modern tax systems such as GST, indirect taxes often resulted in a cascading effect, commonly known as “tax on tax.” Taxes were imposed at multiple stages of production and distribution without allowing credit for taxes already paid. This increased the final cost of goods and services and reduced economic efficiency. Although GST has largely addressed this issue through the input tax credit mechanism, the possibility of cascading may still arise if tax structures are not properly designed. Therefore, avoiding tax duplication remains an important challenge in indirect taxation.
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