India’s Direct Tax Buoyancy Stays Above 1 for Third Year

Key facts

• India's direct tax buoyancy remained above one for the third consecutive financial year in 2024-25 at 1.39, indicating that direct tax collections continued to grow faster than nominal gross domestic product (GDP).
• Direct tax buoyancy rose from 1.27 in 2022-23 to a peak of 1.48 in 2023-24, before moderating to 1.39 in 2024-25, still well above one.
• In 2019, the government slashed the corporate tax rate for domestic manufacturing companies from 30% to 22%, and for new manufacturing firms from 25% to 15% to attract investments.
• The budget 2025-26 exempted individuals from paying income-tax for incomes up to ₹12 lakh under the new regime, with effective exemption rising to ₹12.75 lakh for salaried taxpayers due to standard deduction.
• The gross tax-to-GDP ratio improved significantly from 10% in 2019-20 to an estimated 11.2% in the 2026-27 budget estimates.