I-T Key Driver as Tax Revenue Growth Dips

Despite cut, PIT projected to rise 14.4%

- PRIYANSH VERMA

DESPITE THE POTENTIAL revenue loss of ₹1 lakh crore, due to tweaks in the income tax rate structure, announced by finance minister Nirmala Sitharaman, the tax revenue collections projected for FY26 are still heavily reliant on personal income tax mop-up.

The Budget has projected gross tax revenue (GTR) collections in the next fiscal year to rise 10.8% to ₹42.7 lakh crore, over the revised estimate (RE) of ₹38.5 lakh crore in FY25. This would translate to a tax buoyancy of 1.1 in FY26, which is slightly lower than a projected buoyancy of 1.2 for FY25.

The personal income tax (PIT) is projected to rise 14.4% over RE of FY25, and corporate income tax (CIT) 10.4%. In FY25, the PIT growth is seen rising 20.3% on year, and CIT by merely 7.6%. As a percentage of GDP, PIT collections are expected to come in at 4% in FY26, marginally up from 3.9% in FY25.