With extreme volatility in the stock market, collections through securities transaction tax (STT) surged around 52 per cent during April 1 and October 14 of the current fiscal year (2026-27 or FY27), the Income Tax Department reported on Thursday. Experts believe the trend in STT collections provides an opportunity to cut not this just levy but also long term capital gain tax.
Meanwhile, overall net direct tax collection rose by over 13 per cent during the period under consideration.
Data from the Income tax Department showed that collection from STT grew to ?46,840 crore in April 1-October 14, 2026-27 as against ?31,000 crore in 2025-26. This also means over 63 per cent of the budget estimates have already been met.
“The STT number needs to be carefully looked at. When the Nifty is down sharply and foreign investors have withdrawn over ?3 lakh crore from Indian equities in 2026. The jump owes more to higher STT on futures and options announced in Budget 2026, not from markets momentum,” said Sandeep Sehgal, Partner at AKM Global.
More competitive
With corporate tax collections growing at this pace, the government has room to reduce the overlap between STT and long-term capital gains (LTCG) tax in Budget 2027. “That would make Indian equities more competitive for global capital, support the rupee, and help reverse foreign outflows, without putting revenue targets at risk,” he said.
Meanwhile, corporate tax grew by 20 per cent while mop up through non-corporate tax increased around 6 per cent. Non corporate tax includes taxes paid by individuals, HUFs, firms, AoPs, BoIs, local authorities, artificial juridical person. However, the majority of non-corporate taxpayers are individuals.
With the current growth rate of net collections, experts are hopeful of meeting the direct tax target which is ?26.97 lakh crore. “With net direct tax collections reaching around 50 per cent of the FY27 Budget Estimate of ?26.9 lakh crore in the first 6.5 months, the government’s tax collections appear to be on track,” said Jayesh Sanghvi, Tax Partner at EY India.
Sharp rise
Net corporate tax collections are significantly ahead of non-corporate tax collections, primarily due to the sharp rise of nearly 67 per cent in refunds in the latter category, which could be indicative of excess tax withholding/advance tax for certain taxpayers.
“Going forward, the trajectory of collections and refunds in the second half will be important to watch as the government progresses towards its full-year target,” Sanghvi said.
Richa Sawhney, Partner at Grant Thornton Bharat, said the latest direct tax numbers reflect healthy tax buoyancy, with broad-based growth across key revenue streams. Equally significant is the sharp increase in refunds, particularly for non-corporate taxpayers, which reflects the administration’s focus on faster processing of taxpayer claims. “This suggests that revenue growth is being achieved alongside improved taxpayer service, pointing to a tax ecosystem that is increasingly focused on both compliance and facilitation,” she said.
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