During the first quarter of FY 2025-26, net direct tax collection by India’s government is down 1.39% year-on-year to ₹4.59 lakh crore. Update released by government on 21 June 2025 would attribute slightly greater reduction in net tax collections as a result of considerably delayed advance tax collection, notably reported from corporate sector.
The Central Board of Direct Taxes (CBDT) have recently released data that net direct tax collections as of April 1st to June 19th are lagging behind last fiscal’s figures. Nonetheless, it will be an important data suite to understand preliminary trends influencing India’s fiscal health, level of tax compliance, and whether any adaptations will be necessary in revenue policy.
Objectives & Implications
• Purpose of Advance Tax: A mechanism to allow tax authorities to collect tax with the reporting of an income stream and relieve taxpayer from the anxiety of accumulation of tax liability (tax burden) at year-end.
• Refund Blast: The significant ride in refunds will play a role in limit on net collections indicating continued strength of gross collections composition (including payments> refunds.
• Single Variable: Point in time disclosure, if broadly taken as signal indicating that corporate earnings are slowing or that businesses are more cautious in estimating tax liabilities.
• Policy Implication: Could have implications for fiscal considerations around tax policy and review of previous and current tax compliance trends.
Overall Consideration
Ultimately, this fiscal signal suggest that net direct collections are being shaped by the continued size of refunds driving down overall totals collected when stacked against previous years, however gross collections continue to rise on the strength of the position.
This signal further implies that corporate India may be signalling cautiousness requiring a policy response for possible fiscal deviation (the need for contemplating a proactive).
Key Highlights and Data Points
Net Direct Tax Collection (April 1 – June 19, 2025): ₹4.59 lakh crore
- Decrease 1.39% from ₹4.65 lakh crore in 2024
- Gross Direct Tax Collection: ₹5.45 lakh crore (↑ 4.86% YoY)
- Advance Tax Collection: ₹1.55 lakh crore (↑ 3.87% YoY)
- Last year (2024): Increased 27%
- Corporate Advance Tax: ₹1.22 lakh crore (↑ 5.86%)
- Non-Corporate Advance Tax: ₹33,928 crore (↓ 2.68%)
- Personal Income Tax Collection: ₹2.73 lakh crore (↑ 0.7%)
- Corporate Tax Collection (Overall): ₹1.73 lakh crore (↓ >5%)
- Securities Transaction Tax (STT): ₹13,013 crore (↑ 12%)
- Tax Refunds Issued: ₹86,385 crore (↑ 58%)
