The Changing Landscape of Direct Taxes in India: A Historical and Analytical Perspective

Abstract

Tax revenue forms the backbone of a nation’s fiscal policy, financing essential public services and infrastructure. Within this framework, direct taxes—comprising income tax, corporate tax, and other levies on individuals and businesses—play a critical role in ensuring a stable and equitable revenue base. This paper examines the contribution of direct tax collection to overall tax revenues, analyzing its share in total tax collections and its impact on economic growth and fiscal stability. By reviewing historical trends and statistical data, the study evaluates the effectiveness of direct taxation compared to indirect taxes  in promoting a progressive tax structure. The research highlights the advantages of direct taxation, including its potential to reduce income inequality and enhance economic efficiency.  This study aims to provide insights into the role of direct taxes in shaping a sustainable taxation system. The findings underscore the necessity of a well-balanced tax structure to ensure revenue sufficiency while fostering economic growth and social equity.