The Centre has collected ₹5.63 trillion in net direct tax revenue so far this financial year, marginally lower than what it did in the same time a year ago, on account of the tax relief offered to the middle class.
Data released by the finance ministry on Friday showed that the weakness in net tax collection was visible on both corporate and personal income tax revenue receipts.
After adjusting for refunds, tax revenue from corporations dropped 3.7% to ₹1.99 trillion because of higher tax refunds this financial year. Corporations got ₹89,863 crore of tax refunds so far this financial year, 57% higher than a year earlier.
However, in the case of net non-corporate taxes, which comprises mainly personal income tax receipts, the marginal drop was in spite of a 27% drop in refunds. Under this category, the government has received ₹3.44 trillion so far this financial year, a tad lower than the receipts in the same time a year ago.
The government had estimated in February that the tax relief given to individuals in this year’s budget by reworking the new personal income tax regime would result in forgoing ₹1 trillion in revenue. However, that decision was taken on the basis of the strong revenue buoyancy seen in recent years due to economic growth.
“The decline in net direct tax collections is primarily due to a rise in the volume of tax refunds processed,” an tax expert said.
“This reflects the government’s focus on improving taxpayer services, as timely and efficient refund processing is a critical enabler of ease of doing business,” he said.
Overall, tax refunds are up 38% so far this year, compared to the year-ago period.
The government collected ₹17,874 crore in securities transaction tax (STT) so far this year. This is a 7.5% growth from the year-ago period.
“While the revised personal income tax slab structure continues to offer relief to a large base of taxpayers, resulting in reduced tax liability, higher capital expenditure by corporations has led to increased depreciation claims, which impacts immediate tax outflows,” another tax expert said.
Tax collections usually pick up in the latter part of the financial year, enabling the government to balance its budget. The Centre has set a target of ₹10.82 trillion tax revenue from corporations and ₹14.28 trillion from non-corporate entities, mainly individuals, this fiscal. The tax department is banking on improved voluntary compliance for tax buoyancy, on account of a series of measures it has taken to capture and analyse data on economic activity and share the summary of individuals’ financial transactions with them.
The economy is expected to grow at 6.3-6.8% this financial year and in nominal terms by 10.1%.
The data can be accessed at: https://incometaxindia.gov.in/news/direct-tax-collections-for-fy-2025-26-as-on-10-07-2025.pdf
