Q. The share of direct taxes in India's tax kitty peaked in 2009-10 at 60% and thereafter, it has consistently fallen. Which of the following is the most appropriate reason for the same?
Answer: The share of indirect taxes increased substantially
Notes: In October 2018, a Time series data released by the Central Board of Direct Taxes (CBDT) showed that the share of direct taxes in total taxes rose every year through the first decade of this century — going from 36.31% in 2000-01 to 60.78% in 2009-10. Thereafter it has fallen mainly because of rise of "service tax" collections in the country. Service Tax is now subsumed in GST.
Indirect taxes are said to be regressive in nature as they do not distinguish between poor and rich, and therefore, higher proportion of indirect taxes in total tax collection is not considered ideal.
