The net direct tax collection has increased by 8.82% to Rs 18.37 lakh crore so far in the current financial year till 11 January, data released by the Centre showed. The Centre has budgeted for Rs 25.2 lakh crore through direct taxes in FY26. In order to achieve this target, the collection has to grow by 37% in the next two-and-a-half months.
The tepid growth was owing to net personal taxes growing at a slow 6.4% year-on-year to Rs 9.3 lakh crore during the period. However, net corporate taxes showed a healthy 12.4% growth to Rs 8.63 lakh crore.
The low single digit growth in personal taxation can be attributed to a slew of tax sops given by the Centre in the previous budget. The budget increased the threshold up to which no tax is levied on income from Rs 7 lakh to 12 lakh, making any income up to Rs 12.75 lakh tax free (after including the standard deduction of Rs 75,000).
The budget last year also tweaked the new tax slab, significantly reducing the tax burden on all with the highest tax rate of 30% applicable on income over Rs 24 lakh from the earlier Rs 18 lakh. The government had estimated a revenue loss of Rs 1 lakh crore due to its direct tax proposals in the Budget, yet it has kept a steep target of Rs 14.38 lakh crore collection through personal taxes.
The refunds collection in the financial year to 11 January has gone down sharply. The net refunds during this period stood at ₹3.11 lakh crore. The government has put on hold refunds in cases where claims are substantially high.
The tax department’s automated risk management framework has flagged a high volume of cases where refund claims are substantially high and do not align with official data. Several tax payers received texts and emails from the Income Tax Department citing discrepancies in claimed deductions and donations.
Taxpayers who received notices from the Income Tax Department have either made excessive refund claims or not declared certain investments while re-filing their returns, said a source from the Income Tax department on the condition of anonymity.