Role of Direct Taxes in Revenue Generation for the Government of India

Direct taxes are very important in augmenting the financial strength of Government of India as it forms a predictable and increasing source of income. These are directly imposed taxation on the individuals and corporations, which funds large portions of the public spending and development of infrastructure, pension schemes, and economic reform. The direct taxation collections within India have been improved over the years through structural changes that include digitization, diversification of tax base, and adoption of clear compliance regimes. Direct taxes are progressive and will give a fair and balanced way of distributing income and subsisting in curbing economic inequality. In addition, direct taxes stimulate accountability, transparency and fiscal sustainability in Indian economy. This paper will discuss the significance, pattern and economic consideration of direct tax in revenue collection by Government of India.