Strong growth in direct tax collections and robust Goods and Services Tax (GST) and customs revenues have provided the Centre with a fiscal buffer in the first quarter of FY27, helping it stay on track to meet its fiscal deficit target despite higher subsidy spending, according to an ICICI Bank report.
The report said the Centre’s Gross Tax Revenue (GTR) grew 14 per cent year-on-year in Q1FY27, driven by healthy growth in both direct and indirect taxes. Net tax revenue rose even faster, increasing 38 per cent year-on-year during the quarter, supported by lower transfers to states in June.
Direct tax collections increased 12 per cent yearon-year in the first quarter, with corporate tax collections rising 20 per cent, reflecting robust corporate profitability. The report also noted that as of July 13, net direct tax collections had accelerated further, growing 16.4 per cent year-on-year, indicating continued momentum in tax receipts.
“The sustained strength in revenue receipts provides an important fiscal buffer and remains a key positive amid the prevailing global uncertainties,” the report said.
