Higher refunds slash Centre’s net direct tax revenue📊📉

New Delhi: Higher Refunds Lead to Slight Dip in Net Tax Revenue📊

A sharp increase in tax refunds has led to a slight decline in the union government’s net tax revenue from corporate and personal income taxes, which stood at ₹4.59 trillion so far this year, according to official data.

Net Direct Tax Collections Dip by 1.4%📉

Up to 19 June this year, the government’s net direct tax collections fell by 1.4% year-on-year. However, gross collections — before accounting for refunds — rose by 4.9% to ₹5.45 trillion, the Central Board of Direct Taxes (CBDT) reported on Saturday.

Refunds Surge by 58%💸

During this period, the Income Tax Department issued ₹86,385 crore in refunds for corporate and personal income taxes — a significant 58% increase compared to the same period last year. Corporate tax refunds formed the bulk of this amount.

Breakdown: Corporate vs Non-Corporate Tax🧾

After adjusting for refunds:

• Non-corporate tax receipts (mainly from personal income tax) came in at ₹2.73 trillion — slightly higher than last year’s figures.✅
• Net corporate tax revenue fell by 5% to ₹1.73 trillion.❌

Before refunds, corporate tax collections grew by 9.5% and non-corporate tax revenue edged up by nearly 1%, according to CBDT data.

Sluggish Growth in Personal Income Tax🕊️

Growth in personal income tax collections remained subdued, partly due to tax relief announced in the FY26 budget on 1 February for middle-income earners. This measure is expected to reduce revenue by around ₹1 trillion annually and aims to boost household spending to stimulate the economy.

Faster Refund Processing⚡

“Refunds have increased by 58.04% as of 19 June compared to the same period last year, reflecting improved taxpayer services and faster processing,” CBDT noted.

Advance Tax Payments Show Profit Growth📈

Advance tax payments from corporate and non-corporate taxpayers rose to ₹1.5 trillion so far this year, up 3.87% from the previous year.

“This growth in advance tax payments indicates that companies have seen steady profit growth in the first quarter,” said Amit Maheshwari, Tax Partner at AKM Global.

However, he added, “The slight dip in overall net collections is mainly due to higher refunds issued in the first quarter of FY26. Overall, the data shows that while the economy remains stable, tax collection trends may fluctuate depending on sectoral performance and the pace of refunds.”

Securities Transaction Tax (STT) Grows 12%💹

CBDT also reported that securities transaction tax (STT) collections reached ₹13,013 crore so far this year, registering 12% annual growth. STT rates vary between 0.001% and 0.2% depending on the financial instrument, with the highest rates applied to shares listed through an IPO. STT acts as a tax collected at source and provides the government with valuable market data.