The central government's direct tax collections have grown by over 9% so far this fiscal year, reaching ?10.83 trillion as of 17 September. The increase comes despite a slowdown in personal income tax revenue following recent tax cuts.
Official data shared by the Central Board of Direct Taxes (CBDT) showed that before adjusting for refunds, direct tax revenue from corporate and personal income tax grew 3.4% so far this financial year to ?12.43 trillion. The data covers revenue collection from 1 April to 17 September.
The Income Tax department has issued ?1.61 trillion in tax refunds during this period, which is nearly 24% less than the same time last year. This decrease was most notable in personal income tax refunds, while corporate tax refunds continued to grow.
“The net direct tax revenue growth reflects a combination of modest rise in gross receipts and a sharp decline in refunds issued,” said Amit Maheshwari, Tax Partner at AKM Global, a tax and consulting firm.
The reduction in personal income tax refunds this year led to a 13.67% growth in net non-corporate tax revenue collection, comprising mainly of personal income tax receipts, despite a less than 1% growth before adjusting for refunds.
Meanwhile, advance corporate tax collections are up 6.1% to ?3.52 trillion, while advance collection of non-corporate tax declined by 7.3% to ?96,784 crore.
“A key factor influencing this decline is the new tax relief introduced in Union Budget 2025, which provides for zero tax liability on income up to ?12 lakh,” said Maheshwari.
This measure has directly reduced the advance tax burden on a significant section of individual taxpayers, thereby moderating collections in the non-corporate segment, said Maheshwari.
The improvement in advance corporate tax collection reflects business’ outlook of profitability for this financial year. Advance tax is to be paid in four instalments in a year.
Overall, the numbers suggest a positive start for the government’s revenue collections this fiscal, though upcoming instalments and refund timing will be important to watch for the rest of the fiscal year, added Maheshwari.
Receipts from securities transaction tax (STT) so far this year stood nearly flat at ?26,305 crore. Rate of STT varies from 0.001% to 0.2% based on the instrument it is levied on, with the highest rate getting applied on shares getting listed as part of an initial offer.
The government is banking that the personal income tax relief given this year and the GST rate cuts taking effect from 22 September will boost consumption demand and stimulate the economy. This in turn is expected to eventually make up for the revenue foregone. Finance minister Nirmala Sitharaman said on Thursday the GST rate cut is expected to boost consumption demand by ?2 trillion.
Besides tax rate cuts, the government is also betting on regulatory and policy reforms to unleash the untapped potential of the Indian economy. Economy expanded 7.8% in the quarter ending June, its fastest rate in five quarters.
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