Taxman Triumphs Again: Direct Tax Collections Climb Over Rs 10.8 Lakh Crore, Powering Growth

Image Source: Business Standard

India’s net direct tax collections have witnessed a robust growth of more than 9.18% year-on-year, reaching Rs 10.82 lakh crore during the period from April 1 to September 17, 2025, according to the latest statement released by the Income Tax Department on September 18, 2025. This substantial increase underscores the ongoing strength in tax compliance and revenue mobilisation despite global economic challenges.

Key Highlights of the Net Direct Tax Collections

The net direct tax collections stood at Rs 10.82 lakh crore, up from Rs 9.91 lakh crore in the corresponding period last year, marking a significant rise.
Gross direct tax collections, which are before tax refunds, grew by 3.39% year-on-year to Rs 12.43 lakh crore.
Tax refunds issued by the government decreased sharply by 24% to Rs 1.6 lakh crore compared to the same period last year, contributing to the higher net collections.
Corporate tax mop-up recorded substantial gains, with net corporate tax collections at Rs 4.72 lakh crore, up from Rs 4.50 lakh crore in the previous year.
Non-corporate tax collections, encompassing income from individuals, Hindu Undivided Families (HUFs), firms, Association of Persons (AoPs), and others, rose to Rs 5.84 lakh crore from Rs 5.13 lakh crore last year.
Advance tax collections showed mixed trends — corporate advance tax grew by 6.11% to Rs 3.52 lakh crore, while non-corporate advance tax declined by 7.30% to Rs 96,784 crore.
Collections from Securities Transaction Tax (STT) stood steady at Rs 26,306 crore, marginally up from Rs 26,154 crore in the previous year.

Robust Corporate Tax Collections Signal Economic Activity

The growth in corporate tax collections, both in advance and net terms, is a positive indicator of continued corporate earnings and profitability amid the ongoing economic environment. Corporate taxpayers contributed Rs 4.72 lakh crore net direct taxes so far, showing resilience and compliance in the large taxpayer segment which forms the backbone of India’s tax revenues.

Improved Non-Corporate Collections Reflect Broader Tax Base

Non-corporate collections, which largely comprise individual taxpayers, HUFs, and smaller entities, have grown steadily by over 13%, reflecting expanding tax compliance among individuals and smaller businesses. This growth also indicates increasing formalisation of income and expanding participation in India’s tax net, supporting fiscal stability.

Slower Refunds Boost Net Collections

A sharp 24% fall in tax refunds to Rs 1.6 lakh crore has greatly supported the net direct tax collection growth. Reduced refunds can be attributed to better advance tax payments and stricter assessments reducing large-scale claims, thereby improving the net revenue figures for the government.

Fiscal Year 2025-26 Projections and Outlook

For the full fiscal year 2025-26, the government has projected direct tax collections at Rs 25.20 lakh crore, targeting a 12.7% year-on-year increase. The government also aims to collect Rs 78,000 crore from Securities Transaction Tax in FY26. These ambitious targets reflect optimism about continued revenue growth supported by economic recovery and tax policy measures.

Summary of Tax Collections April 1 to September 17, 2025 (Rs Lakh Crore)

Net Direct Tax Collections: 10.82 (9.18% growth)
Gross Direct Tax Collections: 12.43 (3.39% growth)
Tax Refunds: 1.60 (24% decline)
Corporate Tax (Net): 4.72 (up from 4.50)
Non-Corporate Tax (Net): 5.84 (up from 5.13)
Corporate Advance Tax: 3.52 (6.11% growth)
Non-Corporate Advance Tax: 0.97 (-7.30% decline)
Securities Transaction Tax: 0.26 (steady)

This strong revenue performance amid global uncertainties indicates India’s improving tax compliance ecosystem, enhanced enforcement measures, and growing economic activities. The sizeable increase in net direct tax collections will enable the government to meet fiscal deficit targets and ramp up development spending in remaining months of the fiscal.

Source: Income Tax Department, Government of India; Report dated September 18, 2025.