The Income Tax Department's latest data reveals a robust 8% year-on-year growth in net direct tax collections for the current financial year up to December 17. This positive trend is significantly underpinned by a notable contraction in refunds issued by the tax authorities.
Key Numbers: Growth Amidst Refund Slowdown
According to figures released on Friday, net direct tax collections for the period April 1 to December 17 stood at Rs 17.05 lakh crore, marking an 8% increase compared to the same timeframe last year. This performance is closely tied to a sharp 13.52% decline in refunds, which totaled Rs 2.97 lakh crore as against Rs 3.43 lakh crore a year ago.
On a gross level, direct tax receipts grew by 4.16% to Rs 20.02 lakh crore, up from Rs 19.22 lakh crore in the corresponding period of the previous fiscal year.
Advance Tax and Securities Transaction Tax Trends
The data also highlights the performance of advance tax collections, crucial for government cash flow. Advance tax collections rose by 4.27% to Rs 7.88 lakh crore as of December 17. A detailed breakdown shows a mixed picture: corporate advance tax grew healthily by 7.98% to Rs 6.07 lakh crore, while non-corporate advance tax, which includes payments by individuals, HUFs, and firms, declined by 6.49% to Rs 1.81 lakh crore.
On the securities markets front, Securities Transaction Tax (STT) collections saw a marginal increase of 0.2%, reaching Rs 40,194.77 crore compared to Rs 40,114.02 crore last year. STT is levied on the purchase and sale of securities listed on Indian stock exchanges.
Refund Delays and Fiscal Pressures
The slower pace of income tax refunds has been a point of concern among taxpayers, especially after the filing deadline of September 16. While refunds did increase on a month-on-month basis to Rs 2.97 lakh crore by December 17 from Rs 2.43 lakh crore on November 10, the yearly comparison shows a significant drop.
In November, CBDT Chairman Ravi Agrawal addressed the issue, stating that while low-value refunds were being processed, the department was conducting a detailed analysis of "high value" or "red flagged" refund claims to scrutinize wrongful deductions.
With just over three months remaining in the financial year, the government faces a challenging task to meet its full-year direct tax target of Rs 25.20 lakh crore set in the Budget 2025-26. The required collection for the last quarter is Rs 8.15 lakh crore, following the Rs 17.05 lakh crore collected so far.
Fiscal pressures are mounting this year due to multiple factors, including tax reductions under the GST regime, lower nominal GDP growth, personal income tax cuts, and lagging disinvestment proceeds. A report from Union Bank of India estimates a revenue shortfall of around Rs 53,000 crore for FY26. According to Nomura Global Markets Research, the revenue loss from GST measures is approximately Rs 24,000 crore, with a central government fiscal impact of around Rs 14,000-15,000 crore.
