The Finance Ministry is hopeful of meeting the ₹28.7 lakh crore tax collection target this fiscal year. A senior official said on Tuesday, "Budget tax targets are likely to be met this fiscal year." Strong direct tax and GST receipts should help offset lower collections seen under Central Excise Duty.
Despite lower collections under Central Excise Duty, the Finance Ministry is hopeful of meeting the budgetary targets for overall net direct tax collections, a senior government official said on Tuesday. He also said that recent measures by the GST Council on refunds for input services and capital goods, and the unblocking of Input Tax Credit (ITC) for various items, would benefit the majority of sectors.
The Union Budget projected net tax collections (both direct and indirect) of ₹28.7 lakh crore. Data from the Income Tax Department showed that net direct tax collections rose 13 per cent year-on-year to ₹12.1 lakh crore between April 1 and September 17. Similarly, CGST collections crossed ₹2.42 lakh crore during the April-September period.
"Budget tax targets are likely to be met this fiscal year," the official said, adding that a possible shortfall in excise duty collections could be offset by stronger receipts from other major tax heads. "There may be a shortfall in excise duty collections. Higher collections from direct taxes, GST and customs are expected to compensate for the losses," he said.
Meanwhile, the official said that recommendations on refunds for input services and capital goods would benefit the majority of sectors and, in turn, have some impact on tax collections.
At its meeting on October 8, the GST Council recommended that Input Tax Credit (ITC) availed on input services on or after November 1, 2026, be included in the computation of refunds under the inverted duty structure. The same provision will apply to capital goods.
The official said the number of assessees under GST was expected to rise with the easing of registration procedures. "We have had discussions on improving the base and also the quality of disclosure. We can leverage technology to increase the base without the exercise being intrusive," he said, adding that some analysis had also been shared with the States.
Currently, there are 1.7 crore registered taxpayers, of whom 97 lakh are under State formations, with the remainder under Central formations.
Officials said state tax officers should ensure that cash tax collections increase, and the output tax liability of businesses should not be equal to their input tax credit claims. "We need to strengthen our tech system and adopt a non-intrusive approach. We have to improve data analytics, find gaps, and increase outreach to taxpayers to make them understand the benefits of compliance," an official said, while drawing a parallel to the Income Tax Department's 'Nudge' campaign.
Officials also said the B2C e-invoicing will ensure data reaches the last mile in the supply chain -- from suppliers to final buyers. Currently, businesses with an average annual turnover of ₹5 crore have to mandatorily generate e-invoices for B2B sales. The GST Council, chaired by Union Finance Minister Nirmala Sitharaman and comprising state counterparts, had in September 2024 recommended rolling out a pilot for B2C e-invoicing. Now effort is to roll out B2C e-invoicing will be rolled out voluntarily from April 1, 2027.
"We are encouraging states to use the GSTN system for B2C e-invoicing. As regards businesses, we will show them the benefits of B2C e-invoicing and the impact it will have on audit compliance. Since tax officers will receive granular data from B2B and B2C e-invoices, they will enjoy better treatment in tax administration," an official said.