Current Context: On 3 September 2026, government data presented during the Parliamentary Standing Committee on Finance’s review of direct-tax reforms showed that India’s direct-tax buoyancy remained above one for the third consecutive financial year. It stood at 1.39 in FY2024-25, indicating that direct-tax collections increased faster than the country’s nominal GDP.
- Direct-tax buoyancy was 1.27 in FY2022-23 and increased to 1.48 in FY2023-24.
- It moderated to 1.39 in FY2024-25, but continued to indicate strong revenue responsiveness.
- Tax buoyancy measures how tax revenue changes in relation to economic growth.
- It is calculated as:
- Percentage growth in tax revenue ÷ Percentage growth in nominal GDP
- A value above 1 means tax revenue is growing faster than nominal GDP.
- A value equal to 1 means tax revenue and nominal GDP are growing at the same rate.
- A value below 1 means tax revenue is growing more slowly than nominal GDP.
- The government attributed the performance to easier compliance, expansion of the tax base and reforms in tax administration.
- The Parliamentary Standing Committee on Finance was chaired by Bhartruhari Mahtab.
Question:
Q1. What was India’s direct-tax buoyancy in FY2024-25?a) 1.27
b) 1.30
c) 1.39
d) 1.48
Answer: c) India’s direct-tax buoyancy stood at 1.39 in FY2024-25. A buoyancy value above one indicates that direct-tax collections grew faster than nominal GDP.
