The direct tax collection after refunds till January 11 of the current financial year recorded a growth of 8.82% on-year, compared with a budgeted growth target of 13.2% over FY25 actuals.
The direct tax collections (after refunds) reached at Rs 18.37 lakh crore, 73% of the FY26 target of Rs 25.2 lakh crore. The corporate tax collection was Rs 7.67 lakh crore and the non-corporate tax collection was Rs 8.73 lakh crore. The non-corporate tax includes taxes paid by individuals, HUFs, firms, local authorities, artificial juridical person, etc.
Corporate tax receipts after refunds have risen by 12.41% against the projected growth rate of 9.7, while the income tax collections have grown by 6.39% against the far ambitious target of 21.6% set in the Budget. The slower pace in the income tax growth suggests the impact of income tax relief provided to individuals to boost consumption demand.
What does govt data suggest?
According to the data released by the Income Tax Department, the direct tax collection before refunds grew at 4.14% to Rs 21.49 lakh crore. The refunds were declined by -16.92% to Rs 3.11 lakh crore till January 11.
Rohinton Sidhwa, Partner, Deloitte India, said that the 8.82% net direct tax collection growth (after refunds) indicate that the government may be on track to achieve year-end target. “However, it is on the back of significantly lower refunds being released to both corporate and individual tax payers. Exact details of why the trends on refunds diverging significantly from previous year are not very apparent,” Sidhwa said. The refunds were
What did Amit Maheshwari say?
Amit Maheshwari, Managing Partner, AKM Global, said that direct tax collection reflects an improvement over the earlier trend and steady contributions from both corporate and non-corporate taxpayers.
“To stay aligned with the designated collection target for the year, the Income Tax Department is strengthening compliance efforts, using data analytics to identify discrepancies and improve voluntary reporting. A slowing nominal gross domestic product (GDP) growth will impact direct tax collection going forward,” Maheshwari said. The government has projected nominal GDP growth at 8% for the FY26.
The Centre has pegged a direct collection growth of 13.2% to Rs 25.2 lakh crore for FY26 compared with Rs 22.26 lakh crore collected in FY25, despite substantial income tax relief in the budget. The slowdown is partly attributed to major tax relief measures in the FY26 Budget, including raising the exemption limit under the new regime to Rs 12 lakh from Rs 7 lakh and reducing rates across slabs.