India’s Net Direct Tax Collections Go Down Because of a Lot of Refunds

Even while total direct tax collections are steadily rising, net collections fell by 3.95% in FY 2025-26 because refunds rose by almost 10%, with business refunds rising by 21%.

August 13, 2025: New Delhi, India The Income Tax Department’s latest data shows that India’s net direct tax receipts for the 2025–26 fiscal year have gone down a little. As of August 11, the total net collections were Rs 6.64 lakh crore, which is 3.95% less than the Rs 6.91 lakh crore collected during the same time last year.

The main reason for this dip isn’t a drop in tax revenue itself; it’s a big rise in tax refunds. Refunds went up by about 10% from last year to Rs 1.35 lakh crore. Corporate refunds, in instance, jumped by 21%, reaching over Rs 1.03 lakh crore. This partially made up for the gains from gross collections.

On a more positive note, the data also indicates a strong 2.9% increase in corporate tax collections after refunds, which came to Rs 2.29 lakh crore. Better profits for businesses and better tax compliance among big enterprises are certainly helping this rise. But there was a 7.5% reduction in non-corporate tax receipts, which fell to Rs 4.12 lakh crore. This could mean that smaller enterprises and people are making less money or are delaying payments.

The statistics seem a little different before refunds are handled. The total amount of direct taxes collected dropped by 1.87% to Rs 7.99 lakh crore. Within this, gross corporate tax collections went up by 8% to Rs 3.33 lakh crore, while non-corporate tax collections went down by 8%. The Securities Transaction Tax (STT) collections went up by 3.5%, which shows that the financial markets are still active.

In short, the total gross tax collections are up 3.2% over last year, which is a good thing. However, the rise in tax refunds has had a big effect on the final net amount. The data shows that the corporate sector is strong, but it also shows that smaller firms and people will have problems.