India's Direct Tax Mop-Up Slips 4% as Refunds Surge

Collections decline on extension in the deadline to file returns and 10% jump in refunds

- Rhik Kundu

India's direct tax collections showed early signs of strain in the first five months of the ongoing fiscal year (2025-26), with higher refunds tempering revenue growth.

Net collections, spanning corporate tax, non-corporate tax, securities transaction tax, and other levies, stood at ₹6.64 trillion, down 3.95% from ₹6.91 trillion a year earlier, data from the Income Tax Department showed on Tuesday.

Refunds rose nearly 10% to ₹1.35 trillion, a surge that may signal stronger compliance or weaker advance payments from top taxpayers.

Non-corporate tax, paid by individuals and smaller firms, the largest revenue source, fell to ₹4.43 trillion from ₹4.83 trillion.

Corporate taxes rose to ₹3.33 trillion from ₹3.08 trillion.

Securities transaction tax collections posted a modest gain, while receipts under "other taxes" dropped sharply to ₹283 crore from ₹1,636 crore.

The government is targeting ₹25.20 trillion in direct taxes for FY26.