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Informist, Friday, Jul. 4, 2025

 

NEW DELHI – The government is not yet concerned about the slowdown in momentum of revenue collection and is hopeful that the Budget estimates will be met, a senior finance ministry official said Friday. "Apr-Jun is too early to guage any trend, whether there is a shortfall or overshooting but broadly trajectory is at par with Budget figures," the official said. "Revenues during Jul-Sept is when you can begin to understand the trend," the official added. 

 

Concerns about a possible slowdown in revenues emerged after the government's net direct tax collections for Apr. 1-Jun. 19 were down 1.4% on year at INR 4.588 trillion and to add to that, June's goods and services tax collections also grew only 6.2% on year--the slowest pace in four years. 

 

According to the official cited above, direct tax collections may have been affected by the stagnation, and in some cases, moderation in corporate salaries. "Corporates were bit jittery due to the geopolitical situation, tariffs and so salaries were affected in many cases." Besides, refunds have had a huge role to play, the official added. 

 

During Apr. 1-Jun. 19 period, while corporate tax collections were 5.1% lower at INR 1.728 trillion, non-corporate tax collections were up only 0.7% on year at INR 2.727 trillion. Non-corporate tax includes taxes paid by individuals, Hindu Undivided Families, firms, associations of persons, bodies of individuals, local authorities, and artificial juridical persons. The government issued tax refunds worth INR 863.85 billion during Apr. 1-Jun. 19, up 58% from a year ago.

 

High refunds have also been the reason behind the moderation in pace of growth in GST, the official said, adding that looking at a particular month--irrespective of high or low figures--is a flawed way of looking at data as that particular month could have been an outlier. Cumulatively, GST collections in the first three months of 2025-26 (Apr-Mar) grew 11.8% on year to INR 6.224 trillion, higher than the 10.9% growth projected in the Budget.

 

The Budget has projected total tax collections for FY26 at INR 42.702 trillion, up 10.8% from the revised estimate of last year. Of this, the government aims to collect INR 25.20 trillion as direct taxes, up 12.7% on year. Data for FY25 showed that the government has missed the revised aim by INR 582 billion. This means, for the government to meet the target this year, collections will have to grow at a higher-than-budgeted pace of 12.5%.  End

 

Reported by Priyasmita Dutta

Edited by Akul Nishant Akhoury

 

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