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India’s net direct tax collections grew by 5.12% year-on-year to INR 23.40 lakh crore in FY26, according to data released by the Central Board of Direct Taxes, but fell short of the revised target of INR 24.21 lakh crore. The shortfall follows income tax cuts introduced in the Union Budget, including a higher rebate threshold and revised tax slabs aimed at boosting consumption. Corporate tax collections recorded double-digit growth, while non-corporate tax revenues remained largely flat. Gross collections rose to INR 28.12 lakh crore, with refund outflows marginally lower. The data reflects a mixed trend, with stronger corporate performance offset by moderated personal tax growth amid policy changes.
India’s net direct tax collections rose by 5.12% year-on-year to INR 23.40 lakh crore in FY26, according to data released in the past week by the Central Board of Direct Taxes, although the collections fell short of the revised estimates set for the financial year. Advertisement
The revised target for FY26 had been lowered to INR 24.21 lakh crore from the original budget estimate of INR 25.20 lakh crore. The moderation in collections has been attributed to income tax policy changes announced in the Union Budget for FY26, which were aimed at increasing disposable income and supporting consumption.
The government had introduced several measures, including raising the income tax rebate threshold to INR 12 lakh from INR 7 lakh, revising tax slabs, and increasing the standard deduction to INR 75,000. These changes came into effect at the start of the financial year and were expected to reduce tax outflows for individual taxpayers.
Corporate tax collections remained a key contributor to overall growth, with net corporate tax revenue increasing by 11.4% to INR 10.99 lakh crore during FY26. In contrast, non-corporate tax collections, which include taxes paid by individuals and other entities, remained largely unchanged at INR 11.83 lakh crore.
The revised estimates had projected corporate tax collections of INR 11.09 lakh crore and income tax collections, including securities transaction tax (STT), of INR 13.12 lakh crore. STT collections grew by 7.9% to INR 57,522 crore during the year.
Gross direct tax collections for FY26 stood at approximately INR 28.12 lakh crore, registering a 4.03% increase compared to the previous financial year. Refunds issued during the year declined marginally by 1.09% year-on-year to INR 4.71 lakh crore, contributing to the net collection figures.
According to tax experts, the performance of non-corporate tax collections was expected to be impacted by the reduction in personal income tax rates announced in the budget. A tax partner at EY India indicated that the growth in overall collections was supported by strong corporate tax performance and efficient refund management.
A partner at Deloitte India noted that non-corporate tax revenues remained stable despite rate reductions, reflecting an increase in the number of taxpayers and higher transaction volumes. This segment continues to form the largest share of direct tax collections.
The FY26 data highlights the impact of fiscal policy measures on revenue mobilisation, with tax relief for individuals moderating overall growth even as corporate earnings supported collections.
Source - PTI
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