India’s direct tax collections after refunds grew at a five-year low of just 5.12% year-on-year in FY26 (provisional figures) and fell short of the revised estimates of Rs 24.21 lakh crore by Rs 80,594 crore, according to data released by the Central Board of Direct Taxes (CBDT) on Monday. Personal income tax (PIT) collections grew by a mere 0.03% Y-o-Y. In absolute terms, direct tax collections after refunds stood at Rs 23.40 lakh crore, lower than the revised estimate of Rs 24.21 lakh crore.
Corporate tax collections were Rs 10.99 lakh crore against the revised estimate of Rs 11.09 lakh crore, while non-corporate tax collections stood at Rs 11.83 lakh crore against the revised estimate of Rs 13.12 lakh crore. Non-corporate taxes include those paid by individuals, HUFs, firms, local authorities, artificial juridical persons, etc.
Corporate tax receipts (after refunds) rose 11.39% against the projected growth of 12.4% in the revised estimates, while PIT collections grew only 0.03% against the estimated 6.2% growth for FY26.
Structural Reforms
Direct tax collections before refunds grew 4.03% to Rs 28.11 lakh crore. Refunds declined 1.09% to Rs 4.71 lakh crore.
Jayesh Sanghvi, Tax Partner, EY India, said non-corporate tax collections were expected to be impacted by the rate reductions in the new personal income tax regime announced in the Budget. “Healthy corporate tax growth and effective refund management have helped the overall growth reach 5.12%. The healthy corporate tax collections augur well despite disruptions from global conflicts and supply chain issues. Hopefully, this resilience will reflect positively in the coming times,” he said.
According to experts, the tepid performance is primarily due to substantial tax relief measures under the new tax regime, including enhanced rebates that have effectively made annual incomes up to Rs 12 lakh (or up to Rs 12.75 lakh for salaried individuals with standard deduction) completely tax-free.
Behavioral Shifts
Rohinton Sidhwa, Partner, Deloitte India, said year-end tax revenues have been largely flat, recording a mediocre 5% growth. “The securities transaction tax revenues have also grown 8%, reflecting strong buy-sell activity in the stock market,” Sidhwa said.
Vikas Sharma, Lead – Personal Tax, AKM Global, said the moderation in non-corporate tax collections for FY26 is primarily attributable to the structural recalibration of the new tax regime through the Finance Act 2025. “The revised slab rates and the enhanced Section 87A rebate, effectively exempting income up to Rs 12 lakh, have materially reduced the tax outgo for a broad base of individual taxpayers. From a High Net Worth Individual (HNI) perspective, the revised slab structure has induced a behavioural shift in advance tax planning, leading to a temporary moderation in collection velocity during the year,” he said.
Riaz Thingna, Partner, Grant Thornton Bharat, said the figures reflect subdued income growth in the economy. “On the other hand, the positive side is that the economy reflects resilience in the face of strong global headwinds. The trend suggests that tax collections are likely to be more predictable and stable in the short run,” he said.
Sharma also noted that the expansion of the standard deduction to Rs 75,000 and revised TDS thresholds have altered the withholding tax landscape, which directly impacts quarterly TDS remittances.
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