Income Tax Refunds Fall by 24% as FY26 Net Direct Tax Collection Rises to ₹10.82 Lakh Crore

The government’s net direct tax collections for FY26 have seen a solid rise of 9.18%, reaching ₹10.82 lakh crore by September 17, 2025. Despite the growth in tax receipts, taxpayers are facing delays in refunds, which have dropped 24% from last year to ₹1.61 lakh crore.

Sharp Decline in Refunds Contributes to Higher Net Collections

Between April 1 and September 17, 2025, the government issued income tax refunds amounting to ₹1.61 lakh crore. This is significantly lower compared to ₹2.1 lakh crore during the same period last year. The reduction in refunds has aided the rise in net collections, as fewer outflows bolstered the net figure to ₹10.82 lakh crore, up from ₹9.91 lakh crore in FY25.

Corporate and Individual Contributions Grow

Corporate tax remained robust with advance tax collections from companies reaching ₹3.52 lakh crore, a rise of 6.11%. Net corporate tax collection stood at ₹4.72 lakh crore, compared to ₹4.50 lakh crore in the previous year. Non-corporate taxpayers, including individuals and HUFs, contributed ₹5.84 lakh crore, a jump from ₹5.13 lakh crore year-on-year. This shows widening participation in direct tax contributions.

Read More: Net Direct Tax Revenue Up 9.18% to ₹10.82 Lakh Crore as Refunds Drop Sharply!

Flat STT Collection Indicates Stable Market Activity

The Securities Transaction Tax (STT) collection remained largely unchanged. The government collected ₹26,306 crore through STT in this fiscal so far, just slightly above ₹26,154 crore collected by the same time last year, reflecting consistent stock market activity.

Refund Delays Concern Taxpayers

With the ITR filing deadline for non-audit taxpayers closing on September 16, many are now awaiting their refunds. Though their ITRs show “processed” status, multiple users have reported delayed bank credits. The slowdown in processing appears driven by tightened scrutiny and enhanced disclosures introduced in FY26 to avert wrongful claims.

Conclusion

While the government is on track to meet ambitious tax targets for FY26, a 24% drop in income tax refunds has sparked concerns among taxpayers. A rise in both corporate and individual tax collections, along with delayed refunds, has boosted net direct tax revenue significantly.

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