India's Direct Tax Collections: A Mixed Bag

India's net direct tax collections have experienced a slight decline, dropping by 1.34% year-on-year to Rs 5.63 lakh crore as of July 10. This decrease is primarily attributed to a significant surge in refunds, according to recent government data.

Gross Collections Show Promise

Despite the dip in net collections, gross tax collections—before adjusting for refunds—have shown a positive trend, rising by 3.17% to Rs 6.65 lakh crore. This indicates an underlying improvement in earnings, though the net refunds issued this fiscal year have jumped by 38% to Rs 1.02 lakh crore, impacting the final figures.

Sector-wise Performance

Corporate tax net collections fell by 3.67% to Rs 2 lakh crore, while non-corporate taxes, including income tax from individuals and HUFs, remained flat at Rs 3.45 lakh crore. On the other hand, securities transaction tax (STT) collections stood at Rs 17,874 crore.

Expert Insights

Tax experts suggest that the subdued net growth is a result of structural reforms aimed at enhancing taxpayer services and supporting economic activity. "This reflects the government's focus on improving taxpayer services," said Gouri Puri, partner at Shardul Amarchand Mangaldas & Co. Samir Kanabar of EY India added that the revised slab structure for personal tax continues to offer relief to a large base of taxpayers.

Looking Ahead

The Centre has collected 22.34% of its budgeted direct tax target for FY26, signaling a 12.7% growth over the previous fiscal. With measures like expedited refunds and tax relief, the government aims to stimulate economic activity and support long-term growth.