Net direct tax collections up 8% in FY26; refunds decline over April–December

Net direct tax collections rose 8% in the current financial year up to December 17, 2025, helped by steady growth in both corporate and non-corporate taxes, according to data released by the income tax department.

The net direct tax collections stood at ₹17.05 lakh crore, compared with ₹15.78 lakh crore in the same period last year. Gross collections, before refunds, increased by 4.16% year on year to ₹20.02 lakh crore, showing that tax inflows remained stable despite global economic uncertainty, according to the data released by the department.

Rohinton Sidhwa, Partner, Deloitte India, said, "Tax refunds issuance has dropped much below last year nos. while overall tax collection has grown marginally at 4%. The drop in refunds is being attributed to higher amount of screening of any fraudulent refund claims. Holding back of refunds also accelerates litigation that the tax department can ill afford."

"Overall the corporate advance tax increase signals good corporate earnings. Non- corporate advance tax collections have however declined possibly on the back of rate cuts for individuals given in previous budget," said Sidhwa.

Corporate tax continued to be a key contributor, with net corporate tax collections rising to ₹8.17 lakh crore so far this year, compared with ₹7.39 lakh crore in the same period of the previous financial year. This indicates improved profitability across companies and stronger compliance.

Non-corporate tax collections, which include taxes paid by individuals, Hindu undivided families, firms, and other entities, also grew strongly. Net non-corporate tax collections rose to ₹8.47 lakh crore as on December 17, 2025, up from ₹7.96 lakh crore a year earlier, reflecting higher income levels and broader use of digital tax filing, according to the data

Refunds issued by the tax department declined during the period, falling by 13.52% to ₹2.97 lakh crore, compared with ₹3.43 lakh crore last year. Lower refunds helped push up net collections, even though gross collections grew at a slower pace.

Advance tax collections, which are often seen as an early indicator of income growth, rose by 4.27% overall, according to the data. Corporate advance tax grew nearly 8%, while advance tax from non-corporate taxpayers declined by around 6.5%, according to the figures.

The steady rise in direct tax collections is likely to support the government’s fiscal position in the second half of the year, according to the data, as higher revenues can provide more room for public spending without widening the deficit.