Govt May Fall Short Of FY26 Direct Tax Target By Rs 1.5-2 Lakh Crore

The Indian government is likely to miss its direct tax collection target for the fiscal year 2025-26 by an estimated Rs 1.5-2 lakh crore. This alarming projection follows a significant downward revision of the direct tax estimates, which have already been cut by approximately Rs 1 lakh crore from the original budget estimate. Analysts attribute this shortfall to various factors, including slower-than-expected economic growth and a decrease in corporate tax revenues. The government had initially set ambitious direct tax targets to bolster its revenue framework and support public expenditure. However, with rising inflation and global economic uncertainties, achieving these targets has become increasingly challenging. The implications of this shortfall could affect the funding available for key government initiatives and infrastructure projects, further complicating the fiscal landscape as the government navigates its budgetary commitments. Stakeholders, including investors and economists, will be closely monitoring future fiscal policies and measures aimed at enhancing tax compliance and broadening the tax base to mitigate the revenue shortfall.