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The government earns money mainly from direct tax and indirect tax. The other sources include interests, dividends, as well as profit shares collected from public sector companies. 

Direct tax is levied on income and profits earned by individuals, HUFs, and companies. It includes money collected by way of income tax, personal property tax, real property tax, and tax on assets. On the other hand, indirect taxes are imposed on the goods and services that you buy. 

GST, TDS (Tax Deducted at Source), and Customs duty come under indirect taxes. 

As per reports, the gross collections earned by the government via direct taxes alone, for the year 2022-2023 (up to January 10, 2023) is INR 14.71 lakh crores.  

What are Direct Tax and Indirect Tax?  
As an Indian citizen, you are obliged to pay tax to the government either from whatever you are earning or through the goods and services that you purchase. It is a mandatory recurring fee that you have to pay to the state as well as the central government.  

On a broad level, there are two main categories of taxes – direct tax and indirect tax. Here is some information that will help you distinguish between direct tax and indirect tax: 

Direct Tax 
Direct tax is a tax that you pay directly to the authority that is imposing the tax. As an individual, HUF, or business entity, you have to pay this on your own accord. The burden of tax cannot be shifted to any other entity.  

The CBDT (Central Board of Direct Taxes) is responsible for collecting and administrating direct taxes in India. Governed by the Department of Revenue, the CBDT provides regular inputs to the government to plan direct taxes and create policies around them. 

Direct tax is levied as a percentage of the income or profit you have earned. So the higher the income you earn, the higher will be the tax you have to pay. Any Indian under the age of 60 years, who earns more than Rs. 2.5 lakhs per year will have to pay Income tax. 

Indirect Tax 
An indirect tax is a tax that is levied on goods and services that are purchased by consumers. It will be included in the price of the product that you buy. Although it is the consumer from whom the tax money is collected, the person paying the tax would be the one who is selling the product (manufacturer or supplier).  

The CBIC or Central Board of Indirect Taxes and Customs is the authority in charge of collecting and administrating indirect tax. As part of the Department of Revenue, the CBIC formulates policies concerning indirect taxes and takes steps to prevent smuggling and evasion of duties.  

The indirect taxes in India have to be paid by everyone irrespective of the income that they earn.