Are direct and indirect tax complementary to each other?

Yes, direct and indirect taxes are complementary to each other as they serve different purposes in a tax system. Direct taxes, such as income tax, are based on an individual’s or entity's ability to pay, while indirect taxes, like sales tax or VAT, are levied on goods and services consumed. Together, they help diversify government revenue sources, ensuring a more stable and equitable fiscal framework. This combination allows for effective economic management and redistribution of wealth.