Net direct tax collection declines 1.3%
The Income Tax Department reported on Friday that net direct tax collection recorded a de-growth of over 1.3 per cent between April 1 and July 11.
This decline is primarily attributed to a drop in corporate tax collections combined with a significant rise in refunds. According to the data, corporate tax (CT) decreased by approximately 4 per cent, while non-corporate tax (NCT), which includes taxes from individuals, HUF, firms, etc, remained nearly flat.
For the current fiscal year, the budget estimates direct tax collection at ₹25.20 lakh crore, a projected growth of 12.35 per cent compared to the revised estimates of ₹22.37 lakh crore for FY2024-25.
During the period under review, refunds surged by around 38 per cent to over ₹1 lakh crore, compared to approximately ₹74,000 crore during the corresponding period last fiscal year.
Gouri Puri, Partner, Shardul Amarchand Mangaldas & Co, said the decline in net direct tax collections is primarily due to a rise in the volume of tax refunds processed. This reflects the government’s focus on improving taxpayer services, as timely and efficient refund processing is a critical enabler of ease of doing business
Higher compliance
Last month, Finance Minister Nirmala Sitharaman urged Principal Chief Commissioners of Income-tax (Pr.CCsIT) to prioritise making tax compliance simpler, more transparent and taxpayer-friendly, emphasising a structured, process-driven approach to enhance ease for taxpayers and improve voluntary compliance nationwide.
She also encouraged region-specific strategies and the adoption of best practices from better-performing jurisdictions to ensure consistency and improvement across all key performance areas.
Furthermore, the Minister instructed that all departmental appeals falling below the revised monetary thresholds, as announced in the Budget 2024-25, be identified and withdrawn within three months. These revised thresholds are ₹60 lakh for the Income Tax Appellate Tribunal (ITAT), ₹2 crore for High Courts, and ₹5 crore for the Supreme Court.
Published on July 11, 2025
