India’s net direct tax collections dip 1.39% despite surge in refunds

India’s net direct tax collections for the current financial year have declined by 1.39%, reaching ₹4.58 lakh crore as of June 19, compared to ₹4.65 lakh crore during the same period last year, according to data released by the Income Tax Department.

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The Central Board of Direct Taxes (CBDT) stated that the net collection includes ₹1.72 lakh crore from corporate tax (after refunds), ₹2.72 lakh crore from non-corporate tax sources, and ₹13,013 crore from the securities transaction tax (STT), also net of refunds.

Direct taxes—such as income tax, corporate tax, and STT—are levied on individuals and entities based on income or profits, and form a critical part of the government’s revenue base. These collections are essential for the Centre to meet its fiscal deficit target, which is set at 4.4% of GDP for FY26.

Despite the slight decline in net collections, gross direct tax receipts before refunds stood at ₹5.45 lakh crore, marking a year-on-year increase of 4.86%. A key factor behind the drop in net collections is the significant rise in refunds, which totalled ₹86,385 crore—an increase of over 58% from the same period last year.

The increase in refunds and moderate gross growth reflect a mixed trend in tax buoyancy as the fiscal year progresses.