Claim in report: Gross tax collection will increase by 10.4% in 2025-26, government will get 41 lakh crore

New Delhi| The government’s earnings in the form of tax collection are expected to remain strong in 2025-26 as well due to the recovery in economic activity. Tax collection will be good in the next financial year, CareEdge Ratings said in a report. Gross tax revenue could reach Rs 41.4 lakh crore, up 10.4 per cent. This pace of growth is slightly higher than the 10.3 per cent nominal GDP growth projected for 2025-26. The government could get Rs 28.2 lakh crore in the form of net tax revenue.

According to the report, the increase in estimates of gross tax collection underlines the importance of sustainable economic reforms and effective revenue measures to achieve fiscal targets. However, direct tax revenue could grow at a slow pace of 9.6 per cent to Rs 23.3 lakh crore in 2025-26 due to lower income tax collections due to possible relief measures. Corporate tax collections are also expected to increase by 11.4 per cent from a year ago due to the recovery in economic growth.

GST collection 11.8 lakh crore
The government could earn Rs 18.1 lakh crore in the form of indirect tax collection, representing an increase of 11.9 per cent on an annual basis. The contribution of GST in this could increase by 11.4 per cent to reach Rs 11.8 lakh crore. There is also potential for a strong 20 per cent increase in customs duty collection due to high tariffs on edible oil. Protective measures for domestic industries could lead to a further increase in revenue.

Government will get less dividend from RBI
The report said non-tax revenue could decline by 9.8 per cent to Rs 4.8 lakh crore in the next financial year. The dividend received by the government from RBI is estimated to be between Rs 1.1 lakh crore and Rs 1.3 lakh crore, which is much less than Rs 2.1 lakh crore in the previous financial year. The government has so far received only Rs 86 billion from disinvestment. It is possible to achieve disinvestment targets through the sale of IDBI Bank and Shipping Corporation.

Subsidy spending: estimated to reach Rs 4.2 lakh crore
Spending to the government on subsidies may increase to Rs 4.1-4.2 lakh crore in the current financial year 2024-25. This is higher than the budget estimate of Rs 3.8 lakh crore. Bank of Baroda said in the report, the main reason for the increase in burden on the government exchequer is to spend more on food and fertilizer subsidies. In addition, the high costs of storage and transport are also increasing subsidy spending.

The budget allocation is estimated to be more than about 10 per cent after the increase in the minimum support price (MSP) of Rabi crops for the marketing year 2025-26. The budget for fertilizer subsidies alone could increase by 9-10 per cent as import costs rise due to the strengthening of the dollar. The burden on the government exchequer will decrease in 2025-26 The total subsidy burden is estimated to be reduced to around Rs 4 lakh crore in the next financial year 2025-26. It is believed that there will be a big decline in food subsidy and it may remain between Rs 2-2.1 lakh crore. Fertilizer subsidies could stand at 1.7-1.8 lakh crore due to the continued pressure of import costs.

Gross debt 14 lakh crore
In the current financial year, the government’s gross debt could be 14.01 lakh crore and net borrowing could be 11.63 lakh crore. Net debt is expected to decline to Rs 10.8 lakh crore in the next financial year.