Direct Tax
Taxation Beginnerप्रत्यक्ष कर
Definition
Direct taxes are levied directly on individuals and organisations and cannot be shifted to others. They include income tax on individuals, corporate tax on companies, wealth tax (discontinued), securities transaction tax (STT), and capital gains tax. Direct taxes are progressive — higher income attracts higher rates.
How Direct Tax Appears in India's Budget
Direct tax collections have been growing faster than indirect taxes, driven by improved compliance and digital tracking.
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Why Direct Tax Matters
Understanding direct tax is essential for anyone following government finances, preparing for competitive exams, or analysing India's economic policy. This concept directly affects how the government allocates resources and plans its fiscal strategy.
In the context of India's Union Budget 2026-27, with a total size of Rs 53.47 lakh crore, terms like direct tax help citizens and analysts evaluate whether the government is on the right fiscal path. The numbers in the budget are only meaningful when one understands the underlying concepts.
For UPSC aspirants, direct tax is frequently tested in both Prelims and Mains, particularly in Paper III (Economic Development). For CA and MBA students, this concept appears in public finance and macroeconomics courses.
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