Previous Year Question
Direct Tax Code in India is related to which of the following?
Sales Tax
Income Tax
Excise Tax
Service Tax
Correct Answer: B
Detailed Solution
The Direct Tax Code (DTC) was related to India's direct taxation framework, particularly Income Tax. The proposed Direct Taxes Code sought to make the law relating to Income Tax simpler, more organised and consolidated.
A Direct Tax is a tax whose legal burden falls on the same person or entity on whom it is imposed. Income Tax is a major example. An individual or a company directly bears the tax liability on its taxable income.
In contrast, the other three options—Sales Tax, Excise Tax and Service Tax—were traditionally classified as Indirect Taxes. Their tax burden could be passed on to the final consumer through the price of goods or services.
The proposed Direct Taxes Code sought to consolidate and simplify provisions relating to Income Tax and the direct-tax framework. Therefore, among the given options, Income Tax is the clear and appropriate answer.
Current Status
The Income-tax Act, 2025, after being passed by Parliament and receiving Presidential assent, came into force on 1 April 2026. It replaced the nearly six-decade-old Income-tax Act, 1961.
The new Act aims to simplify statutory language and structure.