Merits or advantages of direct tax can be expressed as follows:
1. Simple To Estimate
One notable advantage of direct tax is its simplicity. Direct taxes are very simple to estimate and easy to understand. Tax amount can be calculated without any complication.
2. Ensures Fairness
Fairness is another benefit of direct taxes. Higher tax rate is imposed for high income groups and lower for lower income people. So, it ensures fairness, equality and justice according to the level of income.
3. Transparency/Certainty
Direct taxes are transparent in nature. Both tax payers and receivers (government authority) are certain about the rate and amount of tax to be paid.
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4. Less Costly
Generally taxes are collected at the source which saves both time and money. So, direct taxes are economical in nature.
5. Elastic
Tax rates can be increased or decreased by the government as per the need of the country. So, direct taxes are elastic in nature.
6. Revenue For Government
Direct tax is a major source of government revenue. It is highly productive and very important for economic development.
