The government expects net direct tax collections to grow by 5–6 percent after the second advance tax instalment due on September 15, driven by inflows from self-assessment tax and non-corporate advance tax payments, a senior official said, adding it is confident of meeting its target.
According to the latest income-tax (I-T) department data, net direct tax collections stood at Rs 5.63 lakh crore as on July 10, a 1.34 percent decline from Rs 5.70 lakh crore over the year-ago period. But the government is not worried.
“In September advance tax, there will be a lot of surpluses. On a gross basis, we are already positive. On a very, very conservative basis, net direct tax collection should increase by 5 to 6 percent after the second advance tax. That’s from the current Rs 5.62 lakh crore net,” the government official told Moneycontrol on condition of anonymity.
Income-tax collections are expected to pick up significantly in the September quarter, aided by self-assessment tax paid during the return filing season and advance tax contributions from non-corporate taxpayers.
“By September 15, we expect net collections to reach Rs 11.34 lakh crore which is about 45–48 percent of the full-year target. This is based on buoyancy in self-assessment tax and non-corporate advance tax filings," he said.
Self-assessment tax is paid by taxpayers to make up for any shortfall in liability after adjusting for TDS and advance tax. A large portion of these payments typically comes in between July and September, coinciding with the income-tax return filing deadline.
The first instalment of advance tax, paid largely by corporates in June, has already been factored in. The upcoming instalments in September, December and March, which include tax from individuals and professionals, are expected to boost revenue further.
“Secondly, the next advance tax will increase because individuals — the non-corporate taxpayers — also pay in the second instalment. The first advance tax is mostly for corporates. So, the non-corporate advance tax mainly comes in September, December, and March. That’s when individuals also join in. So there is bound to be greater buoyancy,” he said.
FY26 target
The official added that refund outflows are higher than the previous year but there is no risk to the FY26 direct tax target of Rs 25.20 lakh crore. The government remains confident of achieving the Rs 25.2 lakh crore target for the fiscal.
“The financial year has just started. The economy is doing well. There is no risk of a slowdown and this is not alarming. We know gross growth is much higher than last year,” he said.
On the latest I-T department data, the official said, “Net collections are currently lower only because of higher refund outflows — not due to any slowdown in gross receipts,” the official said.
“We are not worried. The economy is doing well, gross tax intake is healthy, and return filings are higher than last year,” the official added. “Collections are always back-ended — Q3 and Q4 usually bring in the surplus.”
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