Contribution and Changing Trends of Direct and Indirect Taxes in India’s Union Tax Revenue (2015–16 to 2025–26)

Abstract

This paper examines changes in the contribution of direct and indirect taxes to India’s Union tax revenue between 2015–16 and 2025–26. It uses official tax statistics and Union Budget documents, distinguishing historical collections, provisional figures, budget estimates, and revised estimates. Percentage shares, nominal growth, and institutional comparisons reveal a fluctuating but ultimately stronger direct tax contribution. The historical series shows direct taxes accounting for 51.03 percent of combined collections in 2015–16, falling to 46.84 percent in 2020–21, and recovering to 58.81 percent in provisional 2024–25 data. The discussion examines corporate taxation, income taxes, the Goods and Services Tax, customs, excise duties, and fiscal transfers. Illustrative examples explain tax credits, distributional effects, and differences between gross collections and government spending resources. Findings support predictable taxation, broader compliance, transparent reporting, and careful evaluation of exemptions. Revenue growth alone cannot establish improved equity or identify the independent effects of individual reforms. The results highlight the importance of comparable statistics and cautious policy interpretation.