The first instalment of advance tax collection under direct taxes recorded a growth of 4 per cent during fiscal year 2025-26 as against over 27 per cent in the first instalment of fiscal year 2024-25, data from the Income Tax Department showed.
With the decline in the advance tax growth, net direct tax collection saw a decrease of over 1.3 per cent. The department has attributed the decline in net collection to higher refund. “Refunds have increased by 58.04 per cent (as on June 19, 2025) compared to corresponding period of last year reflecting better taxpayer services and quicker issuance of refunds,” it said.
Meanwhile, the lower growth rate in advance tax was due to a dip in mop-up from non-corporate taxpayers (includes taxes paid by individuals, Hindu Undivided Families, Firms, Association of Persons, Body of Individuals, Local Authorities and Artificial Juridical Person), as on June 19, was around ₹34,000 crore as against ₹35000 crore during corresponding period of last fiscal. However, during the same period, collection from corporate tax rose to around ₹1.22 lakh crore as against ₹1.15 lakh crore.
Advance tax is the amount of income tax that is paid much in advance rather than a lump-sum payment at the year-end. Every taxpayer with an estimated tax liability of ₹ 10,000 or more in a financial year is liable to pay advance tax. Businesses can pay an advance tax under the presumptive taxation scheme of Section 44AD on the income generated through their company. People aged 60 years or more who do not have income from any business or profession during the financial year are exempt from paying advance tax. However, senior citizens who have earned a business income in a financial year need to pay advance tax.
Advance tax is to be paid in four instalments. 15 per cent of the total estimated tax liability must be paid on or before June 15. Deadline for the second instalment is September 15 and 45 per cent of the total must be paid by then. Similarly, December 15 and March 15 are due dates for remaining two instalments, respectively. Third instalment means 75 per cent of total and fourth instalment implies entire amount to be paid.
Net Direct Tax collection
Meanwhile, net direct tax collection went down by over 1.3 per cent mainly on account of dip in corporate tax. However, during this period, Securities Transaction Tax (STT) recorded a handsome gain of over 8 per cent mainly on account of more activities in the stock market.
In the Budget Estimate (BE) of Fiscal Year 2025-26, Corporation Tax is estimated at ₹10.82 lakh crore (indicating a growth of 10.4 per cent over RE 2024- 25). Taxes on income (excluding securities transaction tax) are estimated at ₹13.60 lakh crore in BE 2025-26 (recording a growth of 13.1 per cent over RE 2024-25) with an implied buoyancy of 1.30. The implied buoyancy is lower than the average buoyancy of 1.74 obtained in last five years (ending in FY 2023-24).
Overall, in BE 2025-26, gross tax revenue (GTR) is estimated at ₹42.70 lakh crore. It represents a growth of 10.8 per cent over RE 2024-25 with an implied tax buoyancy of 1.07. Direct taxes at ₹25.20 lakh crore are the major contributor to GTR (59.0 per cent of GTR). Indirect taxes are estimated at 17.40 lakh crore.