Indian Government Posts Strong Revenue Growth

Net direct tax collection in India has grown 16% so far this financial year to approximately $119.7 billion after adjusting for refunds. This growth is driven by strong increases in personal and corporate income taxes, as well as taxes on securities trading, according to the Central Board of Direct Taxes.

The robust growth is particularly evident in advance personal income tax collections, which surged by 39% to reach about $12 billion up to September 17. Corporate tax receipts also showed significant growth, increasing by 18% to approximately $39.7 billion.

Securities Transaction Tax revenue nearly doubled in the period from April 1 to September 17, reaching about $3.15 billion, up from $1.61 billion in the same period last year. This significant increase reflects robust activity in the stock market.

For the current financial year, the Indian government aims to collect approximately $264.6 billion in direct taxes, as outlined in Federal budget documents. Of this target, about $142.8 billion is expected to come from personal income tax.

Amritt Insights

While India’s economy grows at 7-8 percent per year, making it the fastest growing G20 country, its government reported that direct tax collection grew at 16 percent in the recent quarter! And this disparity has persisted in recent years. How is that possible, you say? Here are several reasons:

1) With India’s digital payment infrastructure now so wide and deep, much of the “informal” cash based economy is now brought into the tax net.
2) Incomes are growing fast, so many Indians are rising into higher tax brackets, although income tax is a smaller part of government collections than in the USA
3) The impact of the valued added tax (“GST”) implemented early on by the Modi government continues to draw more and more small producers into the tax net, since India makes large companies partly responsible for reporting/collecting GST from smaller vendors

I predict that this disparity between economic growth and tax collection will start to diminish over time.

The strong growth in revenue collections highlights the ongoing economic recovery in India, with both individuals and corporations contributing to the increased revenue.

Last updated: December 26th, 2025