BUDGET
FY27 gross tax mop-up pegged at INR 44.04 tln, up 8.0% on year
This story was originally published at 14:50 IST on 1 February 2026
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NEW DELHI – The Budget for 2026-27 (Apr-Mar), presented by Finance Minister Nirmala Sitharaman on Sunday, projected the gross tax collections at INR 44.04 trillion, up 8.0% from the revised estimate of INR 40.78 trillion for FY26. The revised estimate for FY26 is INR 1.92 trillion lower than the Budget estimate of INR 42.70 trillion. The revised estimate shows tax collections growing at 7.4% on year in FY26 compared with the Budget estimate of 12.5%.
Of the total tax collections in FY27, the government aims to collect INR 26.97 trillion from direct taxes and INR 17.07 trillion from indirect taxes.
The sharply lower tax collections in FY26 are owing to the government's dual tax bonanza during the year. In the Budget last year, Sitharaman raised the tax rebate limit to INR 1.2 million, effectively meaning that individuals with income of up to INR 1.2 million per year do not have to pay any income tax, resulting in a revenue loss of INR 1 trillion per year, Sitharaman had said in the Budget.
The government also lowered the target for goods and services tax collection due to the second tax benefit announced in the year. In September, the GST Council overhauled the indirect tax structure, merging the four slabs of 5%, 12%, 18%, and 28% into two slabs of 5% and 18% from Sept. 22. A host of white goods, especially consumer durables such as washing machines and big televisions, were moved to the 18% slab from 28%, thereby lowering the average GST rate on these as well. The government has estimated it will lose INR 420 billion annually due to these cuts to the GST structure and rates.
The government's total tax collections in Apr-Dec rose 8.5% on year to INR 29.84 trillion.
The government's net tax collections after devolution to states and transfer to the National Calamity Contingent Duty to the National Disaster Response Fund are pegged at INR 28.67 trillion in FY27, up 7.2% on year. The 16th Finance Commission, whose report was tabled on Sunday, retained devolution of 41% of tax collected to states as their share, which is similar to the 41% recommended by the previous 15th Finance Commission. The actual transfer to states will be only 34.7% of gross tax collection in FY27, due to increased reliance on surcharges and cesses. Surcharges and cesses are not devolved to the states.
The 16th Finance Commission recommended the formula for states' share of central taxes and grants-in-aid for five years starting FY27.
The following table details the government's tax collection targets as per the Budget proposals (in INR billion):
FY27 Budget Estimates | FY26 Revised Estimates | FY26 Budget Estimates | Y-O-Y% change (BE vs RE) | |
Corporate Tax | 12,310.00 | 11,090.00 | 10,820.00 | 11.0% |
Income Tax | 14,660.00 | 13,120.00 | 14,380.00 | 11.7% |
Customs | 2,712.00 | 2,582.90 | 2,400.00 | 5.0% |
Excise Duties | 3,889.10 | 3,365.50 | 3,170.00 | 15.6% |
Service Tax | 1.00 | |||
GST | 10,190.20 | 10,464.80 | 11,780.00 | (2.6%) |
CGST | 10,190.20 | 9,584.80 | 10,108.90 | 6.3% |
GST Compensation Cess | 880.00 | 1,671.10 | ||
Tax on UTs | 102.56 | 96.22 | 101.33 | 6.6% |
Other Taxes | 177.00 | 58.30 | 50.00 | 203.6% |
Total | 44,040.86 | 40,777.72 | 42,702.33 | 8.0% |
End
Reported by Priyasmita Dutta and Gunjan Rajput
Edited by Saji George Titus
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