India's Net Direct Tax Collections Surge 9.4% to ₹19.43 Trillion This Fiscal Year
The Central Board of Direct Taxes (CBDT) has released data showing robust growth in India's direct tax collections for the current fiscal year. Net direct tax collections, after accounting for refunds, have reached ₹19.43 trillion between 1 April and 10 February, marking a significant 9.4% increase compared to the same period last year.
Revised Targets and Revenue Performance
This impressive collection figure represents over 80% of the government's revised direct tax target of ₹24.21 trillion for FY26. The initial target was set at ₹25.2 trillion, but was subsequently reduced by ₹99,000 crore in the revised estimates to account for the impact of tax rate cuts implemented this financial year to stimulate consumption.
Corporate tax collections have shown particularly strong performance, with net receipts reaching nearly ₹8.9 trillion after refunds. This represents a substantial 14.5% year-on-year increase, indicating healthy corporate profitability and compliance.
Personal income tax collections have also grown steadily, with net receipts of approximately ₹10.03 trillion after refunds, marking a 5.9% annual growth rate. This growth comes despite tax rate reductions aimed at boosting household consumption, savings, and investment.
Tax Buoyancy and Economic Growth
CBDT chairperson Ravi Agrawal, in a post-budget interview on 4 February, expressed confidence that the income tax department would meet the direct tax buoyancy target of more than 1 reflected in the revised estimates for FY26. This means direct tax revenue is growing at 8.96% annually, outpacing the 8% nominal GDP growth rate.
"Tax buoyancy refers to how fast tax revenue collection grows compared to economic growth rate," explained the CBDT statement. The current figures indicate that tax collections are expanding faster than the overall economy, suggesting improved compliance and economic activity.
Refund Trends and Collection Mechanisms
The tax department has issued refunds worth ₹3.34 trillion so far this fiscal year, which is 18.82% lower than refunds issued during the same period last year. This moderation in refunds has contributed significantly to the stronger net collection growth.
Amit Maheshwari, managing partner at AKM Global, a tax and consulting firm, commented: "India's direct tax collections for FY2025-26 continue to show a positive trajectory. Gross collections up to 10 February 2026 stood at ₹22.78 trillion, recording a growth of about 4.1% over the corresponding period of the previous year."
He added: "After adjusting for refunds, net collections have grown at a stronger pace of around 9.4%, reflecting moderation in refunds and resilient tax inflows. The increase is largely attributable to higher personal tax collections and a moderation in refunds compared to the previous year."
Advance Tax and Upcoming Collections
With the fourth instalment of advance tax due by 15 March, significant additional collections are expected. Approximately half of annual net direct tax revenue typically comes from this collection mode. Additionally, many taxpayers file revised returns by the end of March, which traditionally adds to revenue collections.
At the gross level, corporate tax collection grew nearly 8%, while non-corporate tax (primarily individual income tax) grew 0.95% annually. The government's rationalization of tax deducted at source (TDS) and tax collected at source (TCS) in recent budgets has contributed to reduced refunds this year.
Non-Tax Revenue and Broader Fiscal Picture
While tax rate cuts implemented in the current fiscal are expected to moderate growth rates for both personal income tax and goods and services tax (GST) revenue receipts, the Centre's non-tax receipts have been robust. By October-end, the government had collected nearly the entire ₹3.25 trillion non-tax revenue target for the full year.
This includes the ₹2.69 trillion dividend from the Reserve Bank of India (RBI), representing a 27% increase from a year ago. Potential asset sales through March could further boost the government's non-tax revenue this year.
Direct Tax Reforms and Future Outlook
The growth in direct tax collections coincides with significant reforms to India's direct tax regime. CBDT chairperson Agrawal noted that India's long-awaited overhaul of its direct tax system has effectively arrived in stages, combining the simplified Income Tax Act enacted last year with a toned-down penalty and enforcement framework under the Finance Bill 2026.
The Income Tax Act, 2025 will replace the decades-old Income Tax Act, 1961 and is structured to simplify and streamline the country's direct tax framework. The law is set to come into effect from 1 April 2026.
Agrawal stated that the income tax rules to be issued this month under the new statute will feature simpler procedures and forms that capture data more efficiently. The CBDT is also preparing to roll out revamped procedures and user-friendly 'smart' tax return forms later this month.
Additionally, the Centre collected ₹50,279.17 crore in securities transaction tax (STT) so far this year, slightly above STT receipts from a year ago, indicating continued activity in financial markets.
Maheshwari concluded: "Overall, the upward trend in collections indicates sustained economic activity and improved tax compliance. Statutorily, these figures cover all direct taxes levied under Act and the higher net collections indicate improved revenue realization."
