Whalesbook
India's direct tax collections for fiscal year 2025-26 ended on a steady but slowing path. Net collections reached ₹23.40 lakh crore as of March 31, 2026, marking a 5.12% increase year-on-year and slightly surpassing the Revised Estimates (RE) set in the Union Budget. While the government met its fiscal goals, this growth rate represents a significant deceleration from previous periods.
Experts called the growth 'mediocre' but highlighted underlying economic strength. Rohinton Sidhwa, Partner at Deloitte India, stated the figures were largely in line with expectations. "As expected, year-end tax revenues have been largely flat with mediocre growth of ~5%," he commented.
Sidhwa noted the resilience of non-corporate tax (NCT) collections, which held steady despite significant rate cuts. "NCT revenues have surprisingly sustained themselves in spite of a very significant rate cut," he said, attributing this to growth in volumes and taxpayer numbers. Securities Transaction Tax (STT) revenues also rose around 8%, signaling robust equity market participation.
Riaz Thingna, Partner at Grant Thornton Bharat, agreed, viewing the data as a sign of both caution and resilience. He observed that the slower growth reflects subdued but steady income expansion. "The economy shows resilience against strong global challenges and improved tax compliance," Thingna added. He expects revenue flows to become more stable and predictable, indicating a move toward a more formalized economy, which is positive for stock markets.
Gross direct tax collections rose 4.03% to ₹28.11 lakh crore from ₹27.03 lakh crore in the previous fiscal. Refunds decreased by 1.09% to ₹4.71 lakh crore, helping support the net collection figures.
Segment-wise Performance
- Corporation Tax (CT) collections increased to ₹13.81 lakh crore from ₹12.72 lakh crore, indicating continued corporate profitability.
- Non-Corporate Tax (NCT) remained nearly stable at ₹13.72 lakh crore, compared to ₹13.73 lakh crore last year, demonstrating resilience even after tax rate reductions.
- Securities Transaction Tax (STT) grew to ₹57,522 crore from ₹53,296 crore, reflecting strong stock market activity.
- A sharp drop was observed in 'Other Taxes', falling to ₹334 crore from ₹3,366 crore, though this category has a limited overall impact.
Fiscal Takeaway: Stability Over Acceleration
The slight overshoot of the Budget RE provides the government with some fiscal flexibility. More importantly, the data signals a shift from high-growth tax revenue to a more predictable, compliance-based system. The FY26 direct tax collections paint a 'steady but slowing' picture, which experts suggest reflects a maturing tax system and a more formalized economy, likely leading to more stable future revenue streams.