India's net direct tax collection so far this fiscal stood at Rs 5.63 lakh crore, marking a 1.34% decline compared to the same period last year, according to data released by the Central Board of Direct Taxes on Friday.
The dip in net inflows is largely attributed to a 3.81% fall in corporate tax collections, which dropped from Rs 2.07 lakh crore in FY25 to Rs 1.99 lakh crore in the current fiscal. Non-corporate tax collections, including personal income tax, remained largely flat at Rs 3.44 lakh crore.
In contrast, the gross direct tax collection showed modest growth, rising 3.17% year-on-year to Rs 6.65 lakh crore.
A significant driver behind the lower net figures is the sharp increase in refunds. Refund outgo surged 38%, reaching Rs 1.01 lakh crore so far this fiscal. The elevated refund disbursal has effectively offset gains in gross collection, pulling down the net tax mop-up.
The numbers reflect early fiscal trends in revenue mobilisation and will be closely watched as the government aims to maintain its fiscal consolidation path in FY26.
"While fall in net direct tax collection is largely driven by an increase in refunds issued this year, the overall fall in direct taxes can be explained by two major factors," Samir Kanabar, tax partner at EY India, said.
On the personal tax front, the revised slab structure continues to offer relief to a large base of taxpayers, resulting in reduced tax liability. On the corporate side, higher capital expenditure has led to increased depreciation claims, thereby impacting immediate tax outflows, according to Kanabar.
"These measures, from expedited refunds to tax relief and capex incentives are aligned with the broader objective of stimulating economic activity and supporting long-term growth," Kanabar added.
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