Comparison of Direct and Indirect Tax Structures in India: An Analytical Study

Abstract Taxation plays an important role in the development of every country, especially for a developing country like India. A well-structured tax system ensures adequate revenue generation, equitable income distribution, and economic stability for any state. The Indian tax system is mainly classified into two types – a) Direct Taxes and b) Indirect Taxes, each tax system has its own characteristics, advantages, and limitations. This paper compares direct and indirect tax structures of Indian tax system with respect to equity, efficiency, revenue generation, administrative feasibility, and economic impact. The study is based wholly on secondary data, which is collected from various government reports, budget documents, previous research studies etc. The findings show that direct taxes are progressive and equitable, but face challenges such as compliance and tax evasion, and indirect taxes, particularly after the introduction of GST, have increased revenue but remain regressive in nature. The paper concludes that for achieving inclusive and sustainable growth balanced mix of both taxes is essential.