India’s Direct Tax Collections Show Steady Momentum In FY 2025-26

The Income Tax Department on February 10, 2026, released the provisional data on gross direct tax collections, refunds, and net direct tax collections for financial year 2025-26. According to the official data, the collections for gross direct tax for FY 2025-26 stood at Rs 22.78 lakh crore, up by 4.09 per cent over the previous year. Refund issuance, however, has declined significantly, leading to a rise in net collections. Net direct tax collections reached Rs 19.43 lakh crore, an increase of 9.40 per cent on a year-on-year (y-o-y) basis.

The gross collection of Rs 22.78 lakh crore comprises corporate taxes, non-corporate taxes, securities transaction tax (STT), and other taxes. Corporate tax collections amounted to Rs 10.88 lakh crore, while non-corporate tax collections stood at Rs 11.39 lakh crore. STT collections were recorded at Rs 50,279 crore.

According to the data, non-corporate taxes continue to form the largest component of gross direct tax collections. This reflects the rising income levels, growth in formal employment, and better tax compliance among individuals and small businesses.

Refunds issued during the period dropped by 18.82 per cent to Rs 3.34 lakh crore from Rs 4.12 lakh crore from a year ago. The decline can be attributed to improving the tax process, better advance tax estimations by taxpayers, and a tighter scrutiny of income tax returns (ITRs).

Growth in Net Direct Taxes

There was a growth in net direct tax collections, which rose to Rs 19.43 lakh crore as compared to Rs 17.77 lakh crore during the same period last year. Within this, the net corporate tax rose to Rs 8.90 lakh crore, which reflected a strong corporate profitability. Net non-corporate tax collections increased by 5.91 per cent to Rs 10.03 lakh crore. The data highlights a balanced growth journey in both corporate and non-corporate segments, which is essential for a sustainable generation of revenue.

Indicators of Economic Health

The rise in the direct tax collections also signals a continued momentum in economic activity and tax compliance. Growth in corporate taxes is a sign of healthy profit, while the steady rise in non-corporate taxes indicates steady expansion of income. Improved digitalisation, data analytics and measures implemented for compliance by the Income Tax Department have played a key role in reducing leakages in this area.