# Meaning and Nature of Tax
## What is a Tax?
A tax is a compulsory financial charge imposed by the government on persons, transactions, or activities. It is not voluntary — the law compels payment, and non-payment attracts penalty/prosecution.
## Two Broad Categories
| Type | Who bears the burden? | Examples |
|---|---|---|
| Direct Tax | The person on whom it is levied bears it directly; burden cannot be shifted | Income Tax, Black Money Tax |
| Indirect Tax | Levied on goods/services; burden is passed on to the ultimate consumer | GST, Customs Duty |
## Why is Income Tax a 'Direct' Tax?
Because the same person who earns the income is the one who pays the tax — the burden cannot be shifted to another person.
### The flow of administration
```
Tax payer (Assessee)
│ pays tax to
▼
Central Government
│ administered through
▼
CBDT (Central Board of Direct Taxes)
│ controls
▼
Income Tax Department
│ acts through
▼
Assessing Officer (AO)
```
- CBDT is the apex body that frames policy and issues circulars / notifications.
- Assessing Officer (AO) is the field-level officer who actually deals with the assessee.
## Quick recall keywords
- Compulsory — Government — No quid pro quo
- Direct = burden not shifted | Indirect = burden shifted
- CBDT → IT Department → AO