NEW DELHI: Advance collection of personal income tax has seen a decline of 7.3 percent to Rs 96,784 crore as of September 17 of 2025-26 against Rs 1,04,411 crore collected during the same period last fiscal year. The decrease is likely owing to an increase in the threshold limit from Rs 7 lakh to Rs 12 lakh, which was announced in the Budget this year.
However, corporate advance tax collection showed a growth of 6.11 percent to Rs 3,52,129 crore during the said period. As a result, the total advance tax collection for 2025-26 saw a modest growth of 2.9 percent, reaching Rs 4,48,913 crore.
Despite the dip in advance collection of personal income tax, the broader direct tax story remains positive. Net direct tax collections (after adjusting for refunds) have registered a robust growth of 9.18 percent for the fiscal year so far. The net collection until September 17 stands at Rs 10,82,579 crore, compared to Rs 9,91,512 crore in the corresponding period of FY 2024-25.
Net corporate taxes grew by 4.93 percent to Rs 4,72,297 crore, while net personal income tax collections showed a jump of 13.67 percent to Rs 5,83,685 crore. Securities Transaction Tax (STT) remained nearly flat with a minor increase, collecting Rs 26,306 crore.
A key driver behind this strong net growth is a substantial reduction in refunds issued by the department. Refunds have fallen by nearly 24% to Rs 1,60,527 crore this year, from Rs 2,10,858 crore last year. This indicates improved efficiency in tax assessment and processing.
According to Vivek Jalan, partner, Tax Connect Advisory Services LLP, the direct tax collections till 17th September 25 seem to be in alignment with the policy changes by the ministry of finance and procedural changes by CBDT in the recent past.
“With the massive reduction in individual income taxes for 25-26, the non-corporate advance taxes have declined by around 7 percent. Also, on account of very strict monitoring of deductions in the ITRs this year, driven by heightened disclosures, the refunds are being closely scrutinized before release and hence the non-corporate refunds have almost dropped to one-third YoY,” he says.
With the first quarter Nominal GDP growth falling to 8.8 percent from around 10 percent, analysts see it having serious implications for tax collections, fiscal deficit, and corporate earnings.