05 January 2012
Duty Duty is a type of tax that is levied upon goods imported from another country. It is also levied upon goods manufactured within the country such as excise duty. The word duty is mostly used in respect of goods such as custom duty, import duty, excise duty and so forth. Duty is levied only on goods and not on individuals. The most common example of duty is custom duty which is an indirect tax levied upon goods that are purchased from foreign countries and the buyer has to pay tax on them when they enter the country. Similarly, duty that is imposed upon goods going out of the country is called export duty. Tax Taxes are levied by a government to fulfil its obligations towards the citizens. They are the backbone of all the revenues generated by any government. Thus the money collected by the government from the private sector comes within the purview of taxes which includes duties. Taxes are obligatory and not involuntary which means that a person is punishable by law if he fails to pay his taxes. Taxes can be direct or indirect such as income tax which is a direct tax and VAT which is an indirect tax.
Differences between Duty and Tax - Both duty and tax are the revenues generated by a government for its effective functioning. Duty in broader terms is a kind of tax only. But there are differences between the two entities. - Duty is levied upon goods only, whereas tax is levied on both goods and individuals. - Tax is a term used in respect of income such as property tax, wealth tax, income tax etc, whereas duty is used in terms of goods only such as customs duty, excise duty. - Duty is generally a tax levied on good going out or coming inside a country. Duties are sometimes referred to as border taxes. - Higher duties are levied on some categories of products to discourage people from using them. Taxes are mostly progressive in nature.
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