The Centre’s direct tax collections stood at Rs 22.26 lakh crore in FY25, falling short of the revised estimate (RE) of Rs 22.42 lakh crore by 0.7%, largely due to a surge in refunds.
These are collections before the devolution to states, termed “gross collections” in the Budget.
Corporate tax collections came in at Rs 9.86 lakh crore, 0.6% higher than the respective RE of Rs 9.8 lakh crore for the year. The corporate tax receipts exceeded the RE despite a 29% annual jump in refunds at Rs 2.86 lakh crore in FY25.
However, it must be noted that in the budget presented on February 1, the government had revised the estimates of corporate tax receipts. As against the Budget estimates of Rs 10.2 lakh crore, the RE was down 3.9%.
Personal income tax receipts, including securities transaction tax (STT) came in at Rs 12.4 lakh crore, 1.6% lower than the RE for FY25. Personal income refunds rose 22% on year to Rs 1.91 lakh crore.
The Budget raised the target for personal income tax collections including STT, by 5.9% to Rs 12.62 lakh crore against the budget estimates of Rs 11.92 lakh crore.
STT receipts surged by 56% on year to Rs 53,296 crore in FY25 compared with Rs 34,192 crore in FY24, reflecting the stock market boom in the past one year.
The marginal shortfall in direct tax receipts (before devolution) won’t have any impact on the Centre’s finances, given higher non-tax receipts by way of dividends from the Reserve Bank of India and central public sector enterprises.
Gross tax collections are the gauge of revenue efficiency; rate of growth of such tax mop-up versus the expansion rate of nominal gross domestic product denotes tax buoyancy.
Over the direct tax collections in FY24, the mop-up rose 13.57% in FY25. Given the estimated nominal GDP growth of 9.9%, direct tax buoyancy in FY25 is an impressive 1.37.