Budget pegs FY26 gross tax collection at Rs 42.7 lakh crore, up 11%

The anticipated growth in tax revenue for FY26 is expected to be supported by ongoing economic recovery

Finance Minister Nirmala Sitharaman, who presented the second Budget of Modi 3.0 in Parliament on February 1,  has projected gross tax collections for the financial year 2025-26 (FY26) at Rs 42.7 lakh crore, an increase of 11 percent from the budgeted estimate of Rs 38.4 lakh crore in 2024-25.

The revised estimate budget for 2024-25 has set the gross tax revenue target at Rs 38.50 lakh crore.

The projected increase aligns with the government's fiscal strategy to enhance revenue generation while maintaining fiscal discipline.

In the budget estimates of the previous fiscal, the government aimed for a gross tax revenue of Rs 38.40 lakh crore, with Rs 22.07 lakh crore expected from direct taxes and Rs 16.33 lakh crore from indirect taxes.

The revised estimates for FY25 indicate an upward adjustment, reflecting better-than-expected tax collections driven by robust economic activity and effective tax administration.

The growth in tax revenue in FY26 is expected to be supported by economic recovery, policy measures aimed at broadening the tax base and continued efforts to improve compliance.

The government’s focus remains on balancing revenue augmentation with the need to foster a conducive environment for economic growth.

The government's ability to meet these ambitious targets will be crucial for funding its developmental priorities while adhering to fiscal prudence.