Net direct tax collection slips 1.4% in first quarter of 2025-26
The decline was driven by 58% jump in refunds to ₹86,385.31 crore during April-June 19, compared with ₹54,660.79 crore in the same period last year, primarily due to higher corporate refunds
India’s net direct tax revenue fell 1.4% to ₹4.59 lakh crore in the first quarter of 2025-26 (till June19) despite gross collections growing little less than 5% to over ₹5.45 lakh crore, government data released on Saturday showed.
The decline was driven by a sharp 58% jump in refunds to ₹86,385.31 crore during April-June 19, compared with ₹54,660.79 crore in the same period last year, primarily due to higher corporate refunds.
“Refunds have increased by 58.04% compared to the corresponding period of last year, reflecting better taxpayer services and quicker issuance of refunds,” the Central Board of Direct Taxes said.
Tax experts attributed the dip in net collections to transitional factors, including revised tax slabs and increased business investments rather than any structural weakness.
“The marginal dip in net tax collections during the first quarter appears to be the result of expected transitional factors. The revised tax slabs and reduced personal tax rates that came into effect from April 1, 2025, have provided relief to salaried individuals, naturally reflected in lower TDS collections,” said Samir Kanabar, tax partner at EY India.
Corporate tax refunds surged over 67.3% to ₹76,832.08 crore in the three months to June 19, up from ₹45,921.22 crore in the corresponding period of 2024-25. In contrast, non-corporate tax refunds grew just 9.44% to ₹9,551.11 crore from ₹8,727.28 crore.
Kanabar said the higher corporate refunds reflected increased capital expenditure by businesses. “As companies invest in expansion and infrastructure, they benefit from higher depreciation claims, which temporarily lower taxable profits. This is a healthy sign of forward-looking investment behaviour.”
Gross corporate tax collections rose 9.45% to ₹2,49,672.09 crore, but after accounting for refunds, net corporate tax fell 5.4% to ₹1,72,840.01 crore compared with ₹1,82,188.70 crore in the year-ago period.
Non-corporate tax collections showed a different pattern. Gross collections grew marginally less than 1% to ₹2,82,262.41 crore, but with lower refunds, net collections increased about 1% to ₹2,72,711.30 crore compared to ₹2,70,779.31 crore.
Advance tax collections during the period registered 3.87% growth at ₹1.56 lakh crore. Corporate advance tax payments increased 5.86% to ₹1,21,604.48 crore, while collections from non-corporate taxpayers declined 2.68% to ₹33,928.32 crore.
Non-corporate tax includes payments by individual taxpayers, Hindu Undivided Families, local authorities and artificial juridical persons. Advance tax is paid in four instalments during June, September, December and March of each financial year.
“A higher volume of corporate tax refunds processed in the first quarter supported liquidity across sectors. While this may weigh on short-term collection figures, it also signals administrative efficiency. We expect a more balanced picture to emerge in coming quarters,” Kanabar added.
