ITR Refund: Income tax refunds have dropped 14 per cent this fiscal till December 17, 2025, falling to Rs 2.97 lakh crore, even as net direct tax collections climbed to over Rs 17.04 lakh crore.
Government Eyes Higher Targets
Gross direct tax collections, before adjusting for refunds, recorded 4.16 per cent growth at Rs 20.01 lakh crore. For fiscal 2025-26, the government has projected direct tax collections at Rs 25.20 lakh crore, up 12.7 per cent year-on-year, with STT collections targeted at Rs 78,000 crore. Experts say the slowdown in refunds has helped maintain government cash flow while safeguarding against fraudulent claims.
The decline in refunds has been attributed to tighter screening of claims and efforts to prevent fraudulent disbursals, according to tax expert Rohinton Sidhwa.
Deloitte India Partner Rohinton Sidhwa said, The drop in refund issuance is being attributed to higher amount of screening of any fraudulent refund claims. Holding back of refunds also accelerates litigation that the tax department can ill afford.
Corporate Advance Taxes Drive Growth
Net corporate tax collections grew 10.54 per cent to Rs 8.17 lakh crore, while non-corporate taxes, which include levies on individuals, HUFs and firms, rose 6.37 per cent to Rs 8.47 lakh crore. Corporate advance tax alone surged 8 per cent to Rs 6.07 lakh crore, signaling strong corporate earnings, while non-corporate advance tax declined 6.49 per cent at Rs 1.81 lakh crore. Overall, advance taxes grew 4.27 per cent to Rs 7.88 lakh crore.
Sidhwa added, While corporate advance tax growth signals strong earnings, the decline in non-corporate advance tax could be due to rate cuts for individuals given in the previous budget.