TOWARDS SIMPLICITY AND EQUITY: EVALUATING THE REFORM AGENDA OF THE DIRECT TAX CODE 2025

The Direct Tax Code (DTC) 2025 represents a comprehensive reform initiative aimed at replacing the outdated Income Tax Act, 1961. It promises to modernize India’s direct tax framework by simplifying provisions, enhancing tax equity, and streamlining compliance mechanisms. This paper critically evaluates the reform agenda embedded in the DTC 2025, emphasizing its core components—simplification of tax laws, removal of exemptions, digitization of tax administration, and equity across income classes. The study concludes that while the DTC 2025 lays the groundwork for a more inclusive and transparent tax regime, sustained political will, administrative readiness, and public awareness are crucial to realizing its potential. The Direct Tax Code (DTC) 2025 marks a significant step in India’s ongoing efforts to reform its direct taxation system, with the twin goals of enhancing simplicity and promoting equity. This study undertakes a critical analysis of the DTC 2025 reform agenda, assessing the extent to which the proposed changes deliver on these objectives. Drawing on legislative texts, expert recommendations, stakeholder feedback, and comparative tax frameworks, the paper evaluates whether the DTC introduces a genuinely progressive and user-friendly tax regime or whether it perpetuates existing systemic issues rooted in the Income-tax Act, 1961. The paper also explores the implications for various taxpayer segments, including individuals, small businesses, and large corporations, with particular attention to shifts in tax burden and compliance behavior. Equity is assessed through both vertical and horizontal dimensions to determine how the reforms impact income groups differently and whether they contribute to a more just fiscal environment. While the DTC 2025 reflects notable progress toward a more coherent and transparent tax framework, the paper identifies specific areas—such as the revised treatment of capital gains, continued reliance on minimum alternate tax (MAT), and ambiguous sunset provisions—that may hinder its equity outcomes. The study concludes by offering policy suggestions to strengthen the Code's effectiveness, advocating for a data-informed, participatory approach that fosters greater trust in the tax system and ensures long-term economic sustainability. This paper thus contributes to the broader dialogue on tax policy reform by providing a nuanced, evidence-based evaluation of India’s most comprehensive tax overhaul in decades. Keywords: Direct Tax Code 2025, Fiscal Policy, Digital Tax Administration