Decrease in income tax refunds by 24% observed concurrently with growth in net direct tax collections - Detailed analysis provided
The Indian government has set an ambitious target for the fiscal year 2025-26, aiming to collect approximately Rs 78,000 crore from Securities Transaction Tax (STT) and a total of Rs 25.20 lakh crore in direct taxes. This represents a 12.7% increase from the previous year's collection.
According to the Income Tax Department, the window for ITR filing by taxpayers in the non-audit category closed on September 16, 2025. The current head of the Income Tax Department in India for 2025 is not specifically named in the provided search results. However, there is no evidence suggesting that this leader pursued policies causing delays in income tax refunds in 2025.
Vivek Jalan, Partner at Tax Connect Advisory Services LLP, has noted that direct tax collections till September 16, 2025, seem to align with policy changes by the Ministry of Finance and procedural changes by the CBDT. However, he also noted a decline in non-corporate advance taxes by around 7% due to the reduction in individual income taxes for FY 25-26.
In addition, Jalan added that the refunds are being closely scrutinized before release, which has led to a significant drop in non-corporate refunds almost to one-third year-over-year. This has resulted in many taxpayers complaining about delayed tax refunds, despite their ITR status showing "processed."
As the fiscal year progresses, it will be interesting to see how the government meets its ambitious tax collection targets and addresses the concerns of taxpayers regarding delayed refunds.
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