The Union government might have missed the gross tax revenue target (revised estimate) of Rs 40.77 lakh crore by a slight margin in FY26. According to official data, the government collected Rs 34.19 lakh crore in gross tax revenue (GTR) during April-February of FY26. This leaves a substantial gap of Rs 6.58 lakh crore to be bridged in the final month to meet the full-year revised estimate. Typically, around 15% of the annual GTR is collected in March, te final month of a financial year.
The April-February period registered a 6.7% year-on-year (YoY) growth in GTR, reflecting steady but subdued momentum amid varying economic conditions through the year. To hit the revised estimate (RE), however, March collections would need to post a 11.38% YoY growth, markedly higher than the trend in recent years. In FY25, the April-February collection had grown at growth rate of 10.88% and the March collections of Rs 5.9 lakh crore were up just 2.8% on year.
Direct Tax Dilemma
To be sure, the shortfall would be on the direct tax front, particularly in income tax collections. The direct collections after refunds between April 1 to March 17 recorded a growth of 7.19% Y-o-Y, compared with RE of 9% over FY25 actuals for the whole of FY26. Corporate tax receipts after refunds rose by 12.75% against RE of 12.4% while personal income tax (PIT) collections grew by 2.7% against RE of 6.2% for FY26. The collections after refunds reached Rs 22.80 lakh crore.
The corporate tax collections were Rs 10.91 lakh crore against revised target of Rs 11 lakh crore and income tax collection was Rs 11.32 lakh crore against the revised target of 13.12 lakh crore. The slow growth in income tax collection comes as the Union Budget for FY26 introduced a major tax relief making annual taxable income up to Rs 12 lakh completely tax-free under the new tax regime.
Meeting the Deficit Goal
Chief Economist at IDFC First Bank, said the fiscal deficit target of 4.4% of gross domestic product for FY26 is expected to be met.
“The shortfall in gross tax collection in FY26 is likely to be caused by income tax (shortfall). Fiscal deficit target is expected to be met, with expenditure savings in other items such as few ministries which will not meet their expenditure target, transfers to state governments etc. The fact that the last T-bill auction was cancelled and government cash surplus is on the higher side at Rs 3.7 lakh crore as of March 27, shows that the centre is likely to meet its FY26 deficit target,” he said.
On the indirect tax front, the government has provisionally collected 101.2% of its revised indirect tax target for FY26, according to a government official. The total indirect tax mop-up, encompassing customs duties, union excise duties and the Centre’s share of Goods and Services Tax (GST), marginally exceeded the revised estimate of over Rs 15.53 lakh crore. According to the official, customs duty collections stood at 102% of the revised estimate of Rs 2.58 lakh crore, while union excise duty reached 101% of its revised target of Rs 3.38 lakh crore. Central GST (CGST) mop-up was at 100.8% of the revised target of Rs 9.58 lakh crore.
This provisional performance on indirect taxes, driven largely by steady customs and excise inflows along with a late surge in GST, signals resilient compliance and economic activity in the closing months of FY26.
Source from: https://www.financialexpress.com/money/fy26-tax-revenue-target-seen-missed-by-a-modest-margin-4196088/
