New Delhi: Net direct tax collection up 7% YoY. ₹12.92 trillion as of November 10, reflecting a steady inflow of corporate and personal income taxes despite a moderation in overall growth compared to last year.
Revenues, which include corporate tax, personal income tax and securities transaction tax (STT), account for about 49% ₹25.2 trillion target set for FY 26. Before accounting for refunds, gross direct tax collections were at ₹15.35 trillion, up 2.15% from a year earlier, according to data released by the Income Tax Department on Tuesday.
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Total compensation amount ₹2.43 trillion have been issued so far this fiscal year, down 18% from the same period last year.
The decline is largely due to smaller refunds for non-corporate taxpayers, although corporate refunds saw a marginal increase.
Steady income
Revenues from securities transaction tax (STT) remained flat ₹35,681 crore, almost unchanged from the previous year. STT, taken from stock trades, reflected the stock market’s largely sideways movement for most of the year.
While direct tax inflows remain strong, the pace has noticeably moderated. The 7% growth in net collection so far this fiscal is a little more than half of the 12.65% growth projected in the Union Budget and below the 14.35% expansion seen in FY25.
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Analysts say part of the slowdown stems from the personal income tax relief announced in this year’s budget, which is expected to cost the exchequer around ₹1 trillion. However, the government hopes that the lower tax rates will boost consumption and stimulate economic activity, especially when combined with the recent reduction in Goods and Services Tax (GST) rates, which are estimated to bring ₹2 trillion in demand stimulus for the economy.
“The data shows that non-corporate tax collections have remarkably kept pace despite the very significant reduction in rates last year. This is a very good sign that shows stronger growth in revenue levels. On the other hand, returns have come down very significantly,” said Rohinton Sidhwa, Partner, Deloitte India.
Refund limited?
“This could mean that taxpayers who used to pay taxes in cash are either no longer in the tax net, or the government has deliberately reduced refunds,” he said.
Sidhwa added that STT collections have remained largely flat, reflecting market trends, but the recent increase in IPO activity could bring growth in the coming months.
To be sure, the government is relying on a combination of tax relief and policy reforms to reignite consumption and maintain growth momentum. The personal income tax cuts announced earlier this year, along with the cut in GST rates that came into effect on September 22, are expected to boost household spending and boost economic activity.
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Apart from tax measures, the Union government is also banking on regulatory and structural reforms to unlock the untapped potential of the economy. India’s GDP expanded 7.8% in the quarter ended June, the fastest pace in five quarters, underscoring resilience even amid global headwinds.
