However, the government expects higher than anticipated non-tax revenue and savings from expenditure outlays announced under certain flagship schemes to offset any fall in the tax mop-up, enabling it to meet its 2025-26 fiscal deficit target of 4.4% of gross domestic product.
“The exact quantum of the shortfall will be assessed after December 15, after factoring in advance tax trends for the third quarter and analysing the GST collection once the festive boost is over,” said one of the officials, who did not wish to be identified.
Net direct tax collection until November 10 in this fiscal increased almost 7% from a year earlier to ₹12.92 lakh crore. Refunds fell 18% to about ₹2.42 lakh crore during this period. The Centre has budgeted an almost 13% increase in direct tax collection for 2025-26 to ₹25.2 lakh crore.
Earlier this month, Central Board of Direct Taxes (CBDT) chairman Ravi Agarwal said that the government is confident of meeting the budget targets and that the collection may bounce back by December. He underscored that actual projections for revised estimates would hinge on the advance tax numbers for the December quarter.
The GST rate cuts on about 99% of items, with effect from September 22, spurred festive buying of a broad range of products, especially automobiles and electronics, raising hopes that elevated demand would eventually blunt the impact of the tax relief.However, some experts say while the GST cuts were timed well to boost festive buying, tax collection may soften once the festive season is over. So, the GST mop-up in the final three months of the fiscal may not sustain the December quarter momentum.
GST collection (net of refunds) in this fiscal touched ₹12.07 lakh crore until October, up 7.1% from a year before but lower than the budgeted 11% growth. Some experts said the sharp fall in inflation had impacted the increase in tax collection.