A Comprehensive Analysis of India’s Direct Tax Regime: Issues, Impacts, and Innovations

1Pooja Yashwanth Rai, 2Dr. Arvind Saxena

1Research Scholar, 2Associate Professor

1,2Department of Management, Kalinga University, Naya Raipur [C.G.], India

ABSTRACT

The direct tax regime in India plays a crucial role in shaping the country’s fiscal framework and economic development. This paper provides a comprehensive analysis of India’s direct taxation system, critically examining its structural design, operational efficiency, and socio-economic impact. The study explores key components such as personal income tax, corporate tax, and capital gains tax, alongside the policy instruments used for tax collection, compliance, and enforcement. It investigates persistent issues such as tax evasion, administrative bottlenecks, and the complexity of tax laws that hinder effective tax governance. The paper further analyzes the impact of direct taxes on income distribution, investment behavior, and revenue generation. Particular attention is given to recent reforms and digital innovations—including the introduction of faceless assessments, simplified return filing processes, and the expansion of the tax base—aimed at enhancing transparency, accountability, and taxpayer convenience. By comparing India's practices with global benchmarks, the paper identifies existing gaps and suggests actionable policy recommendations to make the direct tax system more equitable, efficient, and growth-oriented. This study contributes to the discourse on tax reform in India and offers valuable insights for policymakers, tax professionals, and academicians.

Keywords: Direct Taxation, Indian Tax System, Income Tax, Corporate Tax, Tax Reforms, Fiscal Policy, Tax Compliance