India's net direct tax collections demonstrated robust growth in the first two months of FY2026-27, rising 14.64% year-on-year to ₹5.21 trillion from April 1 to June 17, according to data released by the Income Tax Department. This represents a significant increase from the ₹4.5 trillion collected during the corresponding period of FY26. The strong performance reflects improved tax compliance and economic activity in the current financial year, with the growth keeping the Centre on track to meet its ambitious direct tax target for FY27. As per The Times of India, the collections were driven by robust advance tax payments from companies and higher securities transaction tax (STT) collections, pointing to continued strength in corporate profitability and market activity. Tax experts at EY and Deloitte noted this marked a reversal of tepid growth seen in the same period last year, indicating the corporate sector was recovering momentum.
Gross direct tax collections also showed positive momentum, increasing 12.46% to ₹6.10 trillion from ₹5.4 trillion recorded a year earlier. Refunds issued during the period amounted to ₹890.26 billion, up 1.19% from ₹87,979.39 crore in the same period last year, indicating improved taxpayer compliance and efficient processing of returns. The refund data was confirmed by the latest government data released on Thursday. Tax experts noted that while net corporate tax showed optically strong performance at 22.44% growth, part of this reflects continued restrained pace of refund disbursals, a trend visible in the previous year as well.
Corporate tax collections on a net basis rose significantly to ₹2.08 trillion from ₹1.7 trillion a year ago, while net collections from non-corporate taxes increased to ₹2.93 trillion from ₹2.71 trillion. Net corporate tax collections increased 22.48% to ₹2.08 trillion during the period, demonstrating strong corporate earnings and business performance. Net non-corporate tax (NCT) collections, which include taxes paid by individuals, Hindu Undivided Families (HUFs), firms, associations of persons, bodies of individuals, local authorities and artificial juridical persons, rose 8.41% to ₹2.93 trillion, indicating broad-based tax collection strength across different taxpayer segments. Tax experts at EY and Deloitte highlighted that corporate advance tax collections rose 16.01% to ₹1.40 trillion, while advance tax collections from non-corporate taxpayers increased 15.30% to ₹37,620 crore, indicating healthy compliance and forward-looking business strategies.
Collections from Securities Transaction Tax (STT) showed exceptional growth, jumping 44.9% to ₹188.56 billion during the period, as reported by The Times of India. This surge in STT collections reflects increased market activity and trading volumes, indicating robust capital market participation and business confidence. The strong performance in STT collections, combined with corporate tax growth, signals continued strength in corporate profitability and market activity. Tax experts noted that the sharp rise in STT collections reflected continued heightened market activity following strong corporate results for FY2025-26, with EY India's Jayesh Sanghvi highlighting this as a key indicator of sustained equity market buoyancy.
Advance tax collections registered strong double-digit growth during the period under review, with total advance tax collections standing at ₹1.78 trillion as on June 17, up 15.30% from ₹1.54 trillion in the corresponding period of the previous financial year. Corporate advance tax collections rose 16.01% to ₹1.40 trillion, while advance tax collections from non-corporate taxpayers increased 15.30% to ₹37,620 crore. Advance tax collections are often seen as a key indicator of business performance and taxpayer planning ahead of the financial year, indicating healthy compliance and forward-looking business strategies. Tax experts at EY and Deloitte emphasized that the growth in advance tax collections indicates a reversal of tepid growth seen in the corresponding period last year, with Deloitte India's Rohinton Sidhwa noting this supports the government's fiscal consolidation efforts during FY27.
The robust early revenue performance matters significantly for the government's fiscal calculations, as New Delhi has targeted a fiscal deficit of 4.4% of GDP for FY27, tighter than the revised 4.8% in FY26. Stronger direct tax flows could ease pressure on spending plans, including capital expenditure, while the World Bank this month raised India's FY27 growth forecast to 6.6% from 6.5% and Goldman Sachs revised its current account deficit projection down to 1.3% of GDP from 2% previously. In its June 2026 Global Economic Prospects report, the World Bank revised India's FY27 growth forecast upward to 6.6% from 6.5% projected in January, making it one of the fastest-growing major economies despite a moderation from the estimated 7.7% growth in FY26. Tax experts noted that the healthy growth in net tax collections could support the government's fiscal consolidation efforts during the year, with EY India's Hitesh Sawhney adding that FY27 has commenced on a firm and promising footing, supported by steady corporate performance and improving compliance trends.
