New Delhi [India], January 24 : The government's tax collections are expected to remain healthy in the financial year 2025-26 (FY26), according to a report by CareEdge Ratings.
Gross tax revenue is projected to grow by 10.4 per cent, slightly higher than the estimated nominal GDP growth of 10.3 per cent. This would result in a tax buoyancy of 1 for the year.
It said "Tax Collections to Remain Healthy in FY26, Gross tax revenue is expected to grow by 10.4 per cent, marginally higher than expected nominal GDP growth of 10.3 per cent in FY26".
The report highlighted that direct tax collections may grow at a slower pace in FY26 due to lower income tax collections, likely caused by potential tax relief measures.
For FY26, the net tax revenue is estimated at Rs 28.2 trillion, with gross tax revenue at Rs 41.4 trillion. The projections underline the importance of sustained economic recovery and effective revenue measures in achieving fiscal goals.
However, corporate tax collections are expected to rise by 11.4 per cent, driven by recovery in economic growth. Overall, direct tax revenue is projected to grow by 9.6 per cent to Rs 23.3 trillion.
The report also stated that the Indirect tax revenue is anticipated to grow by 11.9 per cent in FY26, reaching Rs 18.1 trillion. The Goods and Services Tax (GST) is expected to contribute significantly, with collections projected to grow by 11.4 per cent to Rs 11.8 trillion.
Customs duty collections are also likely to see robust growth of 20 per cent, supported by higher duties on edible oil and possible reversal of the gold customs duty cut. Protective measures for domestic industries may further boost revenue.
However, excise duty collections are expected to remain subdued due to the reduction of the Special Additional Excise Duty (SAED) on domestically produced crude oil to nil in September 2024.
As per the report, Non-tax revenue is expected to decline by 9.8 per cent to Rs 4.8 trillion in FY26. Dividends from the Reserve Bank of India (RBI) are projected to range between Rs 1.1 trillion and Rs 1.3 trillion, significantly lower than Rs 2.1 trillion in the previous year.
Divestment receipts have so far reached only Rs 86 billion, indicating a shortfall. The success of large divestments, such as IDBI Bank and Shipping Corporation, will be critical to meeting targets.
Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor