Taxing Times: Collections Climb, Refunds Race Ahead—What’s Fueling India’s Fiscal Flip

India's gross direct tax collections until FY26 have increased 4.86% year-on-year to ₹5.45 lakh crore as of June 19, 2025, according to the latest figures from the Income Tax Department. Net direct tax collections declined 1.39% to ₹4.59 lakh crore due to a sharp 58% increase in refunds, suggesting faster processing and improved taxpayer service.

 

Key Highlights:

Policy Statements:

The Income Tax Department launched the 'e-Pay Tax' facility for easy payments.

 

The government is reviewing the Income-tax Act of 1961 to rationalize tax laws and reduce litigation. Parliament is looking at the new Income Tax Bill with higher rebates to ensure no one is taxed for incomes of up to ₹12 lakh.

 

What Drives the Trends?

 

Higher Refunds:The 58% increase in refunds arises from improved taxpayer service and faster processing, which directly impacts net collections.

 

Individual Weakness, Corporate Strength:

Corporate advance tax payments remained firm, but individual and non-corporate disbursements softened, tempering overall increases. Budget Priority: July 2024 Budget projections see direct taxes as the mainstay of government revenue, with reforms to simplify and ease the burden on taxpayers. The latest figures establish India's commitment to efficient tax collection and taxpayer-friendly reforms despite net collections being shaken by accelerated refunds. 

 

Source: The Tribune, Times of Oman, The Hindu Business Line, Economic Times, ABP Live