In view of the reduction in Goods and Services Tax (GST) rates, relief in income tax and global pressure on corporate income in some sectors, the Center is expecting a slight decline in tax collection from the budget level in this financial year. However, the government expects any decline in tax collections to be offset by higher-than-expected non-tax revenues and savings from expenditure announced under some key schemes, allowing it to meet its fiscal deficit target of 4.4 per cent of GDP for 2025-26. Let us also tell you what kind of report has come out regarding tax collection.
How much was the net direct tax collection?
An official, on condition of anonymity, said that the exact amount of shortfall will be assessed after December 15 after analyzing the trend of advance tax in the third quarter and GST collection after the end of the festive season. In this financial year, till November 10, net direct tax collection increased by about 7 percent to Rs 12.92 lakh crore as compared to a year ago. During this period, refunds declined by 18 percent to approximately Rs 2.42 lakh crore. The Center has budgeted an increase of about 13 percent in direct tax collection to Rs 25.2 lakh crore for 2025-26.
GST rate was cut
Earlier this month, Central Board of Direct Taxes (CBDT) Chairman Ravi Aggarwal had said that the government is confident of meeting the budget target and tax collections may improve by December. He emphasized that the actual estimates of the revised estimates will depend on the advance tax data of the December quarter. The cut in GST rates on nearly 99 per cent of goods from September 22 has boosted purchasing of many products, especially automobiles and electronics, during the festive season, raising hopes that increased demand will eventually offset the impact of the tax relief.
How much was GST collection?
However, some experts say that the timing of GST cut was right to promote festive shopping, but tax collection may reduce after the festive season is over. Therefore, GST collection in the last three months of the financial year will not be able to maintain the pace of the December quarter. GST collections (except refunds) this fiscal year reached Rs 12.07 lakh crore till October, 7.1 per cent higher than a year ago, but lower than the 11 per cent growth rate set in the Budget. Some experts said that the sharp decline in inflation has affected the growth in tax collection.