Direct Tax Collection Dip Amid Higher Refunds: A Closer Look

Net direct tax collection in India reduced by 1.34% to Rs 5.63 lakh crore during the current fiscal year up to July 10, mainly due to increased tax refunds. Corporate tax collection dropped significantly, and the government's efforts focus on improving taxpayer services and encouraging long-term economic growth.

India's net direct tax collection saw a notable decline of 1.34%, totaling around Rs 5.63 lakh crore until July 10 of the current fiscal year. This drop is primarily attributed to an increase in tax refunds, according to new government data.

The corporate tax collection experienced a fall of 3.67% to about Rs 2 lakh crore from Rs 2.07 lakh crore in the previous period. Meanwhile, non-corporate tax collections remained steady at Rs 3.45 lakh crore from April 1 to June 10, 2025, with securities transaction tax collection reaching Rs 17,874 crore by July 10.

Shardul Amarchand Mangaldas & Co Partner Gouri Puri explained that the rise in refunds highlights the government's commitment to enhancing taxpayer services. EY India Tax Partner Samir Kanabar mentioned that changes in personal tax slabs and increased corporate capital expenditure have also contributed to the reduced net tax collections.

(With inputs from agencies.)