India's tax collections may miss target, but deficit goal stays on track
India might not hit its 2025-26 tax collection target, mainly because of GST rate cuts, income tax breaks, and global headwinds weighing down corporate earnings in some sectors.
Still, the government says it's confident about meeting its fiscal deficit goal of 4.4% of GDP—thanks to higher non-tax revenues and savings from expenditure outlays announced under certain flagship schemes.
We'll know more after mid-December when new numbers come in.
Tax growth slows, but other revenue steps up
Direct taxes have grown by 7% so far this year—good, but short of the 13% target.
GST collections are also lagging behind expectations due to recent rate cuts and super-low inflation (just 0.25% in October).
RBI dividend and disinvestment help fill the gap
Non-tax revenues are making up for some of that shortfall, jumping over 30% thanks to a record ₹2.69 lakh crore dividend from the RBI.
Plus, the government expects another ₹30,000-35,000 crore from selling its IDBI Bank stake soon—giving public finances a much-needed boost.