Direct tax share up at 57 percent of total tax revenue, highest in 14 years

News: The contribution of direct taxes to total tax revenue jumped to 56.72% in 2023-24, the highest in 14 years. The surge was even more stark in the direct tax to GDP ratio which jumped to over a two decade high of 6.64%.

1. Direct Tax: It is a tax that is levied directly on individuals and entities based on their income or wealth.

2. There are various types of direct taxes like income tax, corporate tax, property tax, wealth tax etc.

3. While indirect taxes are the taxes which are imposed on the goods and services rather than on income or profits.

4. Tax-to-GDP ratio: It is a key economic indicator to gauge a nation’s tax revenue relative to the size of its economy as measured by gross domestic product.

5. It has been observed that developed nations typically have a higher tax-to-GDP ratio than developing nations.

6. Tax Buoyancy: It refers to the responsiveness of tax revenue to changes in economic activities, particularly changes in the GDP of a country.