Indirect tax(VAT) refers to a type of tax that is not directly levied on income or profits but is imposed on the production, sale, purchase, or consumption of goods and services. Unlike direct taxes, which are directly paid by individuals or businesses to the government, indirect taxes are typically collected by intermediaries such as retailers or service providers, and the burden of the tax is passed on to the end consumer.
Examples of indirect taxes include value-added tax (VAT), goods and services tax (GST), excise duties, customs duties, and sales taxes. These taxes are often embedded in the prices of goods and services, and consumers indirectly bear the cost of the tax when they make purchases.