A higher pace of refunds till August of FY26, raising nil tax to Rs 12 lakh annual income from Rs 7 lakh, and slower economic growth, are likely the reasons why net non-corporate tax collections have grown at a sub-standard rate so far in FY26, say experts.
According to official data, net non-corporate tax (NCT) collections—which includes personal income tax (PIT) and securities transaction tax (STT) mop-up–stood at Rs 7.55 lakh crore till November 10, up 8.2 percent on year. The Budget, however, has pegged the net NCT mop-up to rise by 21.6 percent in FY26.
The Budget for 2025-26 had increased nil income tax liability for individuals earning up to Rs 12 lakh per annum from the previous threshold of Rs 7 lakh per annum. It also rejigged the I-T tax slabs, to ensure low tax liability for individuals, under the new regime.
For instance, individuals earning Rs 8-12 lakh per annum are now subjected 10 percent tax, whereas, in the previous financial year, individuals in Rs 7-10 lakh bracket were taxed at this rate. The 30 percent tax rate kicked in earlier from Rs 15 lakh annual income, but from FY26 this threshold was raised to Rs 24 lakh per annum.
Why are income tax collections down?
An tax expert said: “One of the major reasons for lower non-corporate tax collections is the reliefs and reduced slab rates announced in the Union Budget 2025.”
During her Budget Speech, on February 1, 2025, Finance Minister Nirmala Sitharaman had said that the government anticipates a revenue loss of about Rs 1 lakh crore due to the I-T relief measures in FY26.
Another tax expert feels that the relief measures announced for new tax regime may have led to more taxpayers adopting the new regime, which could partly explain the lower collections so far.
To be sure, in the old tax regime, individuals earning between Rs 2.5 lakh to Rs 5 lakh per annum are subject to 5 percent tax. Those earning between Rs 5 lakh to Rs 10 lakh are taxed at 20 percent rate, and above Rs 10 lakh, the 30 percent rate kicks in.
Higher refunds, lower growth dampened collections
“In addition, the increased rate of refunds in the early part of the year impacted the net revenue collection,” he said. Till August 11, 2025, total refunds issued by I-T department stood at Rs 1.35 lakh crore, up 9.8 percent on year.
But between April 1 – November 10, refunds stood at Rs 2.42 lakh crore, 17 percent lower as compared to same period of last fiscal. Since September, the I-T department has reduced the pace of refunds.
“The government had anticipated higher collections emanating from greater economic growth but the strong global headwinds have resulted in delayed advance tax payments by non-corporate assessees following a conservative approach,” he noted.
A lower-than-anticipated economic growth has affected corporate tax collections as well. Net corporate tax (CT) collections, between April 1 and November 10, stood at Rs 5.37 lakh crore, up 5.7 percent on year. The Budget has pegged CT mop-up to grow by 9.7 percent in FY26.
Additionally, the Securities Transaction Tax–a tax imposed on both the purchase and sale of certain securities traded on stock exchanges like the NSE and BSE—has seen a negative growth so far in the current financial year.
Till November 10, collections from STT stood at Rs 35,682 crore, down 0.1 percent year-on-year. Although, the Budget has pegged collections for FY26 at Rs 78,000 crore, 41 percent higher from FY25.
“The relative underperformance of the capital markets may have affected STT and capital gains tax collections to some extent,” he said.
Govt likely to meet Budget estimates
Despite underwhelming collections till November 10, the government is of the view that direct tax collections target, pegged in the Budget for FY26, will be met. The Union Budget has project direct tax collections at Rs 25.2 lakh crore in FY26, while till November 10, the mop-up stood at Rs 12.92 lakh crore.
The Budget has pegged direct tax collections growth at 16.1 percent on year, but between April 1-November 10, the mop-up has grown merely 7 percent.
Earlier today Central Board of Direct Taxes (CBDT) Chairman Ravi Agarwal said that the Centre is confident of meeting its Budgeted direct tax collections for FY26. “The third advance tax collections will give a clear picture of growth in personal income tax, STT trends,” he added.
Third advance tax mop-up is due on December 15, 2025.
“If the economy continues to grow at its current pace, we expect higher advance tax and self-assessment tax payments in the later months of the year (December to March). Although direct tax collections may grow more slowly in FY26 due to possible tax reliefs reducing income tax receipts, the overall target could still be achieved,” another tax expert said.
He says that past record shows that in the last three years (FY23, FY24 and FY25) the government has either overachieved or met its collection targets as against the revised estimates. “While the collections will have to grow 21 percent year-on-year from November 10 onwards to meet Budget Estimate, the government may, as in the past years, be able to achieve it.”
