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The healthy rise in the Union government’s direct tax collections over the last few years has led to celebrations within the finance ministry. This is understandable. According to an analysis by the Central Board of Direct Taxes (CBDT), the share of direct taxes in gross domestic product (GDP) in 2023-24 rose to a 24-year high of 6.64 per cent. In 2000-01, this number was about half, at 3.25 per cent.
An equally important development during this period, not captured by the CBDT analysis for obvious reasons, was the decline in the share of indirect taxes in GDP.
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