2025, Vol. 8, Issue 1

author(s)
Manish Kumar

abstract
The Direct Tax Code (DTC) is a major reform effort that seeks to simplify and modernize India's direct taxation system. In this study, the various consequences of the DTC on the Indian economy are examined in depth, including its implications for revenue collection, economic development, income inequality, tax compliance, and corporate conduct. The study points out that although direct taxes are an important part of the country's fiscal framework, structural inefficiencies like a narrow tax base and large exemptions have in the past constrained their effectiveness. The reforms proposed under the DTC, such as the rationalization of tax slabs and the curtailment of exemptions, are likely to increase compliance, widen the tax base, and enhance administrative efficiency. In addition, by enhancing the tax system's redistributive capability, the DTC has the potential to enhance social equity. Tax reform responses by the corporate sector are still ambiguous, but streamlining tax regulations is expected to facilitate investment and strategic tax management. Overall, the DTC, if executed well, can be an effective instrument for India's fiscal consolidation, economic stability, and broad-based growth.