Refunds Dent Net Direct Tax Mopup

Time of India

5 hours ago

India's net direct tax collections declined 1.39% year-on-year to ₹4.58 lakh crore as of June 19 this fiscal, primarily due to a sharp 58% increase in refunds and muted growth in advance tax payments, official data showed.
The figure includes ₹1.72 lakh crore from
corporate tax
and ₹2.72 lakh crore from
personal income tax
.
India Inc's advance tax payments — a barometer of corporate performance and economic outlook — grew 4% year-on-year to ₹1.55 lakh crore. The rate of growth fell sharply from the year-ago period when advance tax collection grew 27% on-year to ₹1.48 lakh crore.
Gross direct tax collections stood at ₹5.45 lakh crore, a 5% increase from the same period last year. However, the income tax department issued refunds of ₹86,385 crore until June 19, compared to ₹54,661 crore a year ago, pulling net collections down.
'The revised tax slabs and reduced personal tax rates that came into effect from April 1, 2025, have provided relief to salaried individuals, and this is naturally reflected in lower TDS collections,' said Samir Kanabar, tax partner at EY India.
While higher volume of corporate
tax refunds
may weigh on short-term collection figures, it is also a sign of administrative efficiency, he said. A more balanced picture may emerge in the coming quarters, he added.
Officials expect tax collections to catch up to meet the budget targets in the coming quarters even though global uncertainties amid US tariff threats and escalating Israel-Iran conflict may have some impact on corporate sentiments.
'We expect the collections to improve in the coming quarters as more people will file the returns,' a senior official told ET.
The Centre has budgeted ₹25.2 lakh crore in net direct tax revenue for FY26, up from ₹22.3 lakh crore in FY25, when collections rose 13.6%, exceeding initial budgeted target. 'For a number of reasons, India finds itself in the position of strength amidst the ongoing global supply chain reset and, therefore, a turnaround in tax collections in next quarters could be quite likely,' said Sumit Singhania, partner at Deloitte India. Finance minister Nirmala Sitharaman is scheduled to engage with principal chief commissioners of the Income Tax Department next week to take stock of zone-wise collection trends and litigation management. The meeting will review age-wise pendency of appeals and push for faster disposal of legacy cases to reduce litigation burden, officials cited above said.