In the proposed work, a modified look-up table-based direct torque control (DTC) scheme is reported for a neutral point-clamped three-level inverter-fed interior permanent magnet synchronous motor drive. In the classical DTC scheme, there are significant torque and flux ripples in the drive due to low number of available switching states. To reduce the oscillations in torque and flux, a three-level inverter-operated IPMSM drive is discussed. In a three-level inverter, the increased count of active voltage vectors is results in more sinusoidal output waveforms. Moreover, stator flux plane has 12 sectors in the proposed work unlike classical DTC. Besides, the higher level of flux and torque hysteresis comparators is implemented. DC link capacitor voltage balancing scheme is also instigated to minimize voltage stress on semiconductor devices, improve stator current THD and increased capacitor life. Based on the sector information, flux and torque hysteresis output and capacitor voltage balance logic, an improved LUT is established and explained for a three-level DTC scheme. Consequently, improved stator current (THD) and decrement in torque and flux ripples are observed. To make the system robust, model reference adaptive control (MRAC) based sensorless speed estimation algorithm is realized. The proposed DTC scheme is compared with a two-level inverter-fed and a three-level-inverter-fed DTC scheme without DC link voltage balance strategy. To carry out the analysis, MATLAB/Simulink environment is utilized. Moreover, to validate the simulation results, experimental analysis of the proposed technique is carried out using dSPACE1104.