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New Delhi: The Central Board of Direct Taxes (CBDT) has reported a 5.12% year on year rise in net direct tax collections for the financial year 2025-26 at ₹23.40 crore, but it still hasn’t met the government’s revised target of ₹24.21 crore. Earlier announcements by Finance Minister Nirmala Sitharaman had lowered the income tax rebates to ₹12 lakh effective April 1,2025 from ₹7 lakh earlier. This was aimed at boosting consumption with further across the board changes in tax rates and a hiked standard deduction to ₹75,000.
Despite this, the Income Tax department has successfully optimized its tax refund protocols by reducing the total refund outflows to ₹4.71 lakh crore in FY26 as against ₹4.76 lakh crore in the previous year. The I-T department has deployed predictive risk assessment algorithms to help tax officers quickly spot violations, besides clearing tax returns, while holding questionable deduction claims through auditing and preventing large-scale revenue leakage.
While the final figures have closed below expectations, early high-frequency indicators have shown how corporate tax filings have performed exceptionally well, rising from ₹2.48 lakh crore to ₹2.76 lakh crore this time, while non-corporate tax collections, including those by individuals, HUFs, firms, and other entities, have increased from ₹2.80 lakh crore to ₹3.14 lakh crore this time.
Though this shortfall raises concerns about the sustainability of overall revenue growth, external geopolitical factors can have a spillover effect on tax collections, with the ongoing war in the Middle East affecting inflation, global trade, and commodity prices, which could affect tax revenues indirectly.
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