India’s direct tax collections have continued to show strong growth, with net receipts reaching ₹21.26 trillion so far this fiscal year. This represents 95 pc of the government’s revised full-year target, the Income Tax Department announced on Monday, following the final advance tax instalment deadline.
The robust growth in tax revenue, which includes corporate income tax, individual income tax, and securities transaction tax (STT), reflects an annual increase of 13.1 pc. This expansion has outpaced India’s nominal GDP growth rate of 9.9 pc, signalling improved tax compliance and economic resilience.
Corporate tax collections have risen to ₹9.69 trillion, marking a 7.1 pc increase from the previous year. Meanwhile, non-corporate tax revenue, which includes individual taxpayers, Hindu Undivided Families (HUFs), and firms, has surged by 17.5 pc, reaching ₹11.01 trillion as of 16 March. This is a notable increase from ₹9.37 trillion collected during the same period last year.
Securities Transaction Tax (STT) collections have experienced significant growth, surging 56 pc to ₹53,095 crore.
This increase is largely attributed to heightened activity in equities, derivatives, and equity-oriented mutual funds. STT rates vary between 0.001 pc and 0.2 pc, with delivery-based equity transactions taxed at 0.1 pc.
Tax Refunds Rise, Slowing Net Collection Growth
While gross direct tax collections have expanded by 16.15 pc, net collections have grown at a slightly slower pace of 13.1 pc. This is due to a substantial 33 pc increase in tax refunds, which have now reached ₹4.6 trillion.
Advance tax collections, which allow individuals and businesses to pay their taxes in instalments, have increased by 14.6 pc to ₹10.44 trillion.
Within this, corporate advance tax payments have grown by 12.54 pc, while non-corporate advance tax collections have surged by 20.47 pc, reflecting broad-based economic activity and financial stability.
With the final advance tax instalment deadline on 16 March, tax experts view these figures as a positive indication of India’s expanding tax base and economic resilience.
AI-Driven Tax Monitoring Enhances Compliance
The rise in tax collections has been attributed to improved compliance measures, including the use of artificial intelligence (AI) by the Income Tax Department to detect tax evasion.
“This trend not only highlights improved tax compliance but also positions India as a dynamic and thriving market, poised for sustained development.
Notably, the Income Tax Department's continuous monitoring through AI-driven systems has played a crucial role in boosting advance tax collections by enhancing compliance and minimising tax evasion,” said Amit Maheshwari, tax partner at AKM Global, a tax and consulting firm.
Uncertainty Over FY26 Personal Income Tax Collections
Looking ahead, there is some uncertainty regarding personal income tax collections in the next financial year (FY26).
The ₹1 trillion tax relief package announced in the Union Budget could impact revenue growth, particularly as the government has set a higher direct tax collection target for the upcoming year.
In the FY26 budget presented on 1 February, the government raised its direct tax revenue target by ₹30,000 crore.
While the current growth trend remains strong, fiscal policymakers will need to balance tax relief measures with revenue generation to maintain the momentum in tax collections.
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