(MENAFN- Live Mint) New Delhi: The net direct tax collections rose 7% year-on-year to ₹12.92 trillion as of 10 November, reflecting steady inflows from corporate and personal income taxes despite a moderation in overall growth compared to last year.

The receipts, which include corporate tax, personal income tax, and securities transaction tax (STT), represent about 49% of the ₹25.2 trillion target set for FY26. Before accounting for refunds, gross direct tax collections stood at ₹15.35 trillion, up 2.15% from a year earlier, according to data released by the Income Tax Department on Tuesday.

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Refunds totalling ₹2.43 trillion have been issued so far this fiscal, an 18% decline from the same period last year.

The fall is largely due to smaller refunds for non-corporate taxpayers, even as corporate refunds saw a marginal rise.

Steady revenue

Revenue from securities transaction tax (STT) remained steady at ₹35,681 crore, nearly unchanged from a year earlier. The STT, levied on equity trades, reflected the stock market's largely sideways movement through much of the year.

While direct tax inflows remain robust, the pace has clearly moderated. The 7% growth in net collections so far this fiscal is just over half the 12.65% increase projected in the Union Budget, and below the 14.35% expansion recorded in FY25.

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Analysts say part of the slowdown stems from the personal income tax relief announced in this year's budget, which is expected to cost the exchequer around ₹1 trillion. The government, however, hopes the lower tax rates will boost consumption and spur economic activity, especially when combined with recent goods and services tax (GST) rate cuts that are estimated to add a ₹2 trillion demand stimulus to the economy.

“The data shows that remarkably, non-corporate tax collections have kept pace in spite of the very significant rate cut last year. This is a very good sign showing stronger growth in income levels. Refunds, on the other hand, have come down very significantly,” said Rohinton Sidhwa, Partner, Deloitte India.

Refunds throttled?

“This could mean that taxpayers who paid cash taxes are either no longer in the tax net or the government has consciously throttled back on refunds,” he said.

Sidhwa added that STT collections have remained largely flat, mirroring market trends, but the recent pick-up in IPO activity could provide an upside in the coming months.

To be sure, the government is banking on a mix of tax reliefs and policy reforms to reignite consumption and sustain growth momentum. The personal income tax concessions announced earlier this year, along with the GST rate cuts that took effect on 22 September, are expected to boost household spending and stimulate economic activity.

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Beyond tax measures, the Union government is also leaning on regulatory and structural reforms to unlock the economy's untapped potential. India's GDP expanded 7.8% in the quarter ended June, its fastest pace in five quarters, underscoring resilience even amid global headwinds.

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