The Union Budget 2025-26 presents a detailed fiscal outlook, with revenue and expenditure projections shaping India’s economic trajectory. As always, the spotlight is on Part B, where the Finance Minister unveils crucial tax proposals.

According to the budget document, total receipts for FY26 are estimated at ₹50.65 lakh crore, with revenue receipts projected at ₹34.20 lakh crore. Capital receipts stand at ₹16.44 lakh crore, slightly higher than FY25’s revised estimates.

Total expenditure is pegged at ₹50.65 lakh crore, marking an increase from FY25’s revised figure of ₹47.16 lakh crore. Meanwhile, the fiscal deficit is estimated at ₹15.68 lakh crore, maintaining fiscal prudence in line with previous years.

Deficit and Expenditure Trends

The revenue deficit is projected at ₹5.23 lakh crore, a decline from the revised FY25 figure of ₹6.10 lakh crore.

Effective capital expenditure is set at ₹15.48 lakh crore, reflecting a continued push for infrastructure development.

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The primary deficit is expected to drop to ₹2.92 lakh crore, from ₹4.31 lakh crore in FY25.

Direct Tax Collections

For FY24, direct tax collections stood at ₹19.45 lakh crore, a 6.6% increase over the initial budget estimates. This growth was fuelled by:

Personal Income Tax: Revised estimates saw a 13.4% rise over initial projections.

Securities Transaction Tax (STT): Surged 15.84% higher than budgeted.

Corporate Taxes: Remained steady in line with projections.

For FY25, the government set a target of ₹22.07 lakh crore. By January 12, collections had already hit ₹20.64 lakh crore (93.54%), driven by:

STT: Surpassing its ₹37,000 crore target, reaching ₹44,538 crore (120% of the goal).
Corporate Taxes: ₹9.71 lakh crore collected (95% of ₹10.20 lakh crore target).
Personal Income Tax: ₹10.45 lakh crore collected, covering 90.87% of the ₹11.50 lakh crore target.

Indirect Tax Collections

While direct tax collections showed impressive growth, indirect taxes have lagged behind expectations. Of the ₹16.18 lakh crore target for FY25, only ₹7.82 lakh crore (48.32%) was collected by January.

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CGST: ₹4.41 lakh crore collected (48.44% of target).

Customs Duties: ₹1.16 lakh crore (49% of the ₹2.37 lakh crore target).

Excise Duties: ₹1.50 lakh crore collected (47.31% of ₹3.19 lakh crore target).

Cesses: ₹74,324 crore collected (49.22% of target).

Trends and Challenges in Indirect Tax Collections

The shortfall in indirect taxes isn’t unprecedented. In FY24, indirect tax targets were revised downward from ₹15.28 lakh crore to ₹14.78 lakh crore, primarily due to:

A 10% decline in excise collections compared to initial estimates.

A 6% downward revision in customs duties.

Experts attribute this underperformance to a slowing economy and weaker consumption patterns. GST, being a consumption-driven tax, has a direct correlation with demand trends.

Similarly, the slowdown in manufacturing has affected customs, excise, and cess collections.

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