tax collection
India's net direct tax collection has increased in the financial year 2025-26. Total collection crossed Rs 23.40 lakh crore with 5.12% growth. Despite reduction in income tax and increase in exemption limit, there has been stability in the collection, which shows that both the taxpayer base and economic activity remain strong.
Net direct tax collection increased in the last financial year but it remained less than the government's Revised Estimate (RE) of Rs 24.21 lakh crore, which clearly shows that the target could not be achieved despite the growth. Earlier the budget estimate was kept at Rs 25.20 lakh crore, which was later reduced.
The biggest impact on tax collection this year was the budget announced on 1 February 2025. Finance Minister Nirmala Sitharaman increased the income tax exemption limit from Rs 7 lakh to Rs 12 lakh and increased the standard deduction to Rs 75,000. Besides, changes were also made in tax slabs and rates, due to which more money came into the hands of common taxpayers and an attempt was made to increase demand.
According to the revised estimate, corporate tax collection stood at Rs 11.09 lakh crore and income tax (including STT) stood at Rs 13.12 lakh crore. Net corporate tax collection recorded a strong growth of 11.4% and reached Rs 10.99 lakh crore. Whereas non-corporate tax collection remained almost stable at Rs 11.83 lakh crore, which shows the strong participation of individual and other taxpayers.
According to CBDT data, Securities Transaction Tax (STT) collection increased by 7.9% to Rs 57,522 crore. There was a decline of 1.09% in issuing refunds and it was Rs 4.71 lakh crore. The total gross direct tax collection was around Rs 28.12 lakh crore, which is 4.03% more than the last financial year.
According to Jayesh Sanghvi, tax partner, EY India, the cut in personal income tax rates was expected to impact non-corporate collections, but good growth in corporate tax and better management of refunds supported the overall growth. Rohinton Sidhwa, partner, Deloitte India, said that despite tax cuts, the stability of non-corporate collections shows that both the tax base and compliance have improved.
