Net direct tax collections rise 8% YoY to Rs 17.05 lakh crore in FY26 on lower refunds

India’s net direct tax collections have surged by 8% to Rs 17.05 lakh crore as of December 17, 2025, compared to Rs 15.78 lakh crore during the same period last year, according to official data released on December 19. This growth has been largely driven by a steady rise in corporate tax receipts and a reduction in tax refunds.

The data from the Income Tax Department revealed that gross direct tax collections grew by 4.16% year-on-year, totaling Rs 20,01,794 crore. Corporate tax collections remained the biggest contributor, with net corporate tax rising to Rs 8,17,310 crore, up from Rs 7,39,353 crore last year. Additionally, net non-corporate tax collections, which include taxes from individuals and other entities, grew to Rs 8,46,905 crore, compared to Rs 7,96,181 crore in the previous year.

One key factor behind the rise in net collections has been a 13.52% decrease in tax refunds, which fell to Rs 2,97,069 crore, from Rs 3,43,499 crore last year.

Meanwhile, collections from the Securities Transaction Tax (STT) remained largely stable at Rs 40,195 crore, with other taxes contributing a smaller share to the overall collections.

Advance tax payments have also shown positive growth, increasing by 4.27% to Rs 7,88,388 crore. Corporate advance tax payments grew nearly 8% to Rs 6,07,300 crore, while advance tax from non-corporate taxpayers saw a decline of 6.49%, totaling Rs 1,81,088 crore.

This revenue performance comes in the wake of significant tax reforms introduced by the government in 2025. In the Union Budget, the government focused on the new personal income tax regime, slashing rates across all slabs to increase disposable income and boost consumption.

Additionally, the GST Council has undertaken steps to streamline tax rates, cutting duties and improving compliance, particularly in sectors prone to tax evasion.

With just over three months left in the current financial year, the government is expected to fall short of its tax revenue targets. In the Budget for 2025-26, direct tax collections were projected to reach Rs 25.20 lakh crore, including corporate tax and income taxes. So far, the government has collected Rs 17.05 lakh crore, leaving a gap of Rs 8.15 lakh crore to be collected in the final quarter to meet the budgeted target.