India’s direct tax collections for FY2025-26 closed on a steady but clearly moderating trajectory, with net collections rising 5.12% year-on-year to ₹23.40 lakh crore, marginally exceeding the Revised Estimates (RE) presented in the Union Budget on February 1. Provisional data released by the Central Board of Direct Taxes (CBDT) suggests that while the government has met its revised fiscal expectations, the pace of growth has cooled significantly compared to earlier years.Net collections inch past Budget RE
The CBDT data shows net direct tax collections at ₹23,40,406 crore as of March 31, 2026, up from ₹22,26,375 crore in FY25. The final number places collections slightly above the Budget RE, offering a modest fiscal cushion at year-end.
However, the narrow outperformance highlights a broader trend—tax buoyancy is stabilising, with growth settling into mid-single digits.Experts flag “mediocre growth” but see underlying strengthCommenting on the trend, Rohinton Sidhwa, Partner at Deloitte India, said the numbers were largely in line with expectations.“As expected year end tax revenues have been largely flat with mediocre growth of ~5%,” he noted.Sidhwa pointed out that non-corporate tax (NCT) collections have held firm despite policy changes. “NCT revenues have surprisingly sustained themselves in spite of a very significant rate cut. This is the largest component of direct tax collections and its reflective of both growth in volumes and number of tax payers,” he said, adding that STT revenues grew around 8%, signalling strong equity market participation.Echoing a similar sentiment but with a more forward-looking tone, Riaz Thingna, Partner at Grant Thornton Bharat, said the data reflects both caution and resilience.“The collection figures reflect a very low growth of 4% reflecting subdued but sustained income growth in the economy. On the other hand the positive side is that the economy reflects a resilience in the face of strong global head winds coupled with greater tax compliance,” he said.Thingna added that the trajectory suggests increasing stability in revenue flows: “The trend is that the tax collections are likely to be more predictable and stable in the short run. It also indicates a sure movement towards a more formal economy. This is good news for the stock markets.”Gross collections rise, refunds dipGross direct tax collections rose 4.03% to ₹28,11,936 crore, up from ₹27,03,107 crore last year.Refunds declined 1.09% to ₹4,71,531 crore, compared with ₹4,76,732 crore in FY25.The moderation in refunds has supported net collections, helping the government edge past its revised targets.Segment-wise performance shows mixed signalsCorporation Tax (CT):Increased to ₹13,81,606 crore from ₹12,72,542 crore, indicating sustained corporate profitability.Non-Corporate Tax (NCT):Remained stable at ₹13,72,474 crore, versus ₹13,73,905 crore last year, reflecting resilience despite tax rate cuts.Securities Transaction Tax (STT):Rose to ₹57,522 crore from ₹53,296 crore, mirroring buoyant stock market activity.Other Taxes:Dropped sharply to ₹334 crore, from ₹3,366 crore, though the category carries limited weight in overall collections.Fiscal takeaway: Stability over accelerationThe slight overshoot of the Budget RE provides the government with limited but meaningful fiscal flexibility. More importantly, the data points to a transition phase—from high-growth tax buoyancy to a more predictable and compliance-driven revenue regime.Bottom lineFY26 direct tax collections underscore a “steady but slowing” narrative. While growth has moderated to around 5%, expert commentary suggests this may not be a negative signal. Instead, it reflects a maturing tax system, improved compliance, and gradual formalisation of the economy—factors that could make revenue streams more stable and predictable in the years ahead.
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