India Robust corporate tax collection in June

Economics Research 31 July 2026 | 7:24PM IST

India: Robust corporate tax collection in June

Bottom line: June fiscal data showed strong direct tax receipts on higher advance Santanu Sengupta | corporate taxes, underpinned by strong corporate earnings, while income tax Goldman Sachs India SPL receipts grew on a low base. Disinvestment (as a % of BE) increased to a four-year Arjun Varma high driven by the government’s equity stake sales in SOEs, while excise duties are | tracking at their lowest over the last two decades, following the excise duty cuts on Goldman Sachs India SPL

petrol and diesel. If corporate tax receipts continue to remain strong, it could provide a partial offset to the shortfall in excise duty collections. Overall expenditure increased sequentially across both current and capital expenditure, but remained flat on a year-over-year basis as higher capex was offset by lower current expenditure.

n India’s fiscal deficit for June came in at 3.4% of GDP (GSe) vs. budget estimate (BE) of 4.3% of GDP and stood at around 18.2% of the total budgeted deficit for the full fiscal year (April 2026 to March 2027), which is higher than the last two years. n Direct tax receipts continue to remain strong, increased by around 14% yoy, driven by a robust growth in corporate tax receipts (+17.5% yoy, 377% mom s.a.) on higher advance tax collection, underpinned by strong earnings. Meanwhile, income tax receipts grew at around 9% yoy (-30% mom s.a.) on a low base. In the first three months of FY27, corporate tax receipts have grown at around 20% yoy, while income tax receipts have grown at around 8.5% yoy, and stood at around 17% of BE and 22% of BE — highest over the last two decades excluding FY22-FY24. n Disinvestment receipts increased by around 450% yoy, driven by the government’s sale of equity stakes in public sector enterprises (PSUs) and are tracking around 30% of BE — the highest over the last four years. Meanwhile, excise duty collections are tracking around 11% of BE — lowest over the last two decades, following the excise duty cuts on petrol and diesel. If corporate tax receipts continue to remain strong, it could provide a partial offset to the shortfall in excise duty collections. n Overall expenditure increased sequentially in June across both current and capital expenditure. Current expenditure excluding interest payments and subsidies increased partly driven by the release of the 23rd installment (around INR 190bn) of the farmer’s welfare scheme in June, while capex increased on higher defence expenditure and transfer to states (Exhibit 2). However, on a

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year-over-year basis, overall expenditure remained flat as higher capital expenditure (+66% yoy) was offset by lower current expenditure (-9.9% yoy). Fertilizer subsidies continue to remain elevated, increasing by around 70% yoy in June, however, the recent correction in global urea prices should reduce the upside risk to the fertilizer subsidy bill vs. our earlier expectations.

Exhibit 1: April-June fiscal deficit at 3.4% of GDP (GSe), 18.2% of BE INR tn FYTD 27 (% Key Budget Items Jun-26 May-26 FYTD (yoy) of BE) Z-score** Total Receipts Revenue Receipts Gross Tax Revenues 3.8 2.6 3.7 0.9 Direct tax Income Tax 1.1 1.0 8.5 0.9 Corporate Tax Indirect Tax 1.2 1.3 -3.7 0.7 Excise Less Allocation to states Net Tax Revenue 2.9 1.7 17.8 Non Tax Revenues* 0.3 3.3 1.2 1.7 Non-debt capital receipts

Expenditure Revenue 3.9 2.4 7.4 0.0 Interest Payments Subsidies Food Fertilizer Current expenditure (ex Interest payments and subsidies) Capital

Fiscal Deficit -1.5 2.0 -1.2 Fiscal Deficit (as % of GDP)^ * Includes Dividends from the RBI in FY26 ** Current month FYTD Z-score vs. 12 year history (FY13 to FY26, leaving out the outliers from covid years, FY21 and FY22). Higher/lower number means more/less receipts or expenditure compared to historical mean.

^GDP is is projected nominal GDP in the Apr-Jun 2026 quarter

Source: CGA, Goldman Sachs Global Investment Research

Exhibit 2: Transfer to…