The spotlight is currently on the decline in income tax collections and falling direct tax revenue. But indirect tax collections of the Centre are also under duress in FY26.
businessline analysis of data from the Controller General of Accounts (CGA) shows that the Customs collections have declined 7.3 percent in April–November 2025 to ₹1.43 lakh crore, compared with ₹1.54 lakh crore in the same period of FY25. CGST collections have also, have registered only 5.4 per cent growth in this period, much below the budgeted growth of 10.9 per cent.
Actuals versus budget
Customs currently account for 6.1 per cent of the Centre’s gross tax revenue. The Union Budget had pencilled in 2.13 per cent growth in Customs receipts for FY26, but the YtD drop of 7.3 per cent indicates that the target is likely to be missed. An tax expert says the shortfall is linked to “tariff rationalisation over the last few budgets, which has reduced effective duty rates even when volumes remain steady. Going forward, sustained growth in Customs will depend more on a recovery in demand and trade, rather than further compliance tightening.”
Moderation is also visible in CGST collections, which rose 5.4 per cent YtD, well below the 10.9 per cent growth assumed in the FY26 budget. According to another tax expert, “CGST growth has moderated, compared to double-digit growth in earlier years, largely because the GST rate rationalisation under the GST 2.0 framework has lowered the tax burden on several goods and services,” making it unlikely that CGST will meet its budgeted target without a late-year surge.
Excise bucks the trend
The outlier among indirect taxes is Union Excise Duties, which has outperformed the Budget. Receipts have increased 9.25 per cent YtD, comfortably higher than the 3.9 per cent growth budgeted for FY26.
The turnaround follows the April 7, 2025, hike in excise duty on petroleum products, which ended a three-year stretch of declining excise revenues and restored the category as a meaningful contributor to the Centre’s indirect tax kitty.
“Taken together, these point to an indirect tax system moving toward a more calibrated, policy-led revenue model, where stability will increasingly depend on sustaining domestic demand and keeping trade and tax policies aligned with growth,” he says.
