India’s gross direct tax collection for FY2025-26 rose by 4.86% to ₹5.45 lakh crore as of June 19, according to the latest data released by the Income Tax Department. The rise reflects steady momentum in tax inflows, though net collections declined marginally due to a sharp surge in refunds.

Key Highlights:

• Gross Direct Tax Collection (FY26 so far): ₹5,45,207 crore
  (Up from ₹5,19,936 crore during the same period last year)

• Net Direct Tax Collection: ₹4,58,822 crore
  (Down 1.39% from ₹4,65,275 crore in FY25)

• Tax Refunds: ₹86,385 crore
  (Up 58.04% from ₹54,661 crore last year)

Advance Tax Collections Show Modest Growth

India’s advance tax receipts saw a healthy growth of 3.87%, reaching ₹1,55,533 crore as of June 19.

• Corporate Advance Tax: ₹1,21,604 crore (Up 5.86%)

• Non-Corporate Advance Tax: ₹33,928 crore (Down 2.68%)

The advance tax numbers indicate continued strength in corporate profitability, while the slight drop in non-corporate contributions may reflect early-year variability.

Refund Surge Driven by Faster Processing

The sharp 58% increase in tax refunds suggests an improvement in taxpayer services and faster refund processing. This has led to a marginal 1.39% decline in net direct tax collection, despite overall growth in gross receipts.

New e-Pay Tax Feature Rolled Out

In a move to simplify compliance, the Income Tax Department launched the ‘e-Pay Tax’ facility on its official portal. This feature aims to make tax payment more convenient and accessible for taxpayers.

Major Tax Code Overhaul in Progress

As part of a long-term tax reform agenda, the Union Budget of July 2024 proposed a complete revamp of the Income-tax Act, 1961. The goal is to make the law simpler, clearer, and less litigation-prone.

• The draft Income Tax Bill, 2025 is currently under review by a Select Committee.

• Aimed at enhancing transparency, the new law promises tax relief for individuals earning up to ₹12 lakh annually.

• The revised structure proposes a rebate of ₹60,000, effectively eliminating tax liability for a large segment of middle-income taxpayers.

The new Income Tax Bill is expected to be tabled in Parliament during the upcoming Monsoon Session, Finance Minister Nirmala Sitharaman confirmed in March.

India’s direct tax performance in early FY26 reflects stable economic activity, strong corporate earnings, and an efficient tax administration system. With broader structural reforms on the horizon, including a new Income Tax Code, the country is paving the way for a more transparent and growth-oriented tax ecosystem.

Source: Economic Times