The Central government is likely to meet its budgeted net tax revenue target of Rs 28.7 lakh crore for the financial year 2026–27, supported by robust direct tax collections, sustained growth in Goods and Services Tax (GST) revenue and an expected improvement in customs receipts.

Stronger collections across major tax categories are expected to offset a potential shortfall in excise duty revenue. However, the final outcome will depend on how tax collections perform during the remaining months of the financial year.

The Union Budget for FY27 has set the gross tax revenue target at Rs 44.04 lakh crore, while net tax receipts are projected at Rs 28.7 lakh crore. The government’s current assessment reflects an improvement in direct tax collections and continued momentum in GST revenue.

Direct Tax Collections Rise 18.3%

Net direct tax collections reached around Rs 11.25 lakh crore as of October 10, registering an 18.3% increase compared with the corresponding period a year earlier, according to government data.

The collections included Rs 5.98 lakh crore from personal income tax, Rs 4.94 lakh crore from corporate tax and Rs 30,630 crore from Securities Transaction Tax (STT).

The improvement comes after a relatively subdued performance in FY26. Direct tax collections grew by 5% to Rs 23.39 lakh crore during that financial year, falling short of the revised estimate of Rs 24.21 lakh crore.

For FY27, the Centre has budgeted direct tax collections of Rs 26.97 lakh crore. The pace of collections so far is expected to support the government’s broader revenue plans, although performance over the rest of the year will remain important.

GST Revenue Maintains Strong Momentum

GST collections have also contributed to the positive revenue outlook. Gross GST revenue increased 14.7% year-on-year to Rs 2.04 lakh crore in September, remaining above the Rs 2 lakh crore mark for the third consecutive month.

For the April–September period, gross GST collections rose 11.6% to Rs 12.46 lakh crore.

The continued growth in GST revenue provides another source of support for the Centre’s tax receipts. Alongside direct taxes, GST collections are expected to help the government maintain progress towards its annual revenue target.

The government also expects reforms in GST processes to support collections. States have been advised to focus on widening the tax base, a step intended to strengthen revenue mobilisation.

Excise Duty Remains a Potential Concern

Despite the positive trends in direct taxes and GST, excise duty collections remain a potential weak spot in the FY27 revenue outlook.

Changes in fuel taxation announced in March could put pressure on revenue from excise duties. Media reports cited in the NDTV Profit article indicate that reductions in excise duties on petrol and diesel could result in a revenue loss of more than Rs 1 lakh crore during FY27, even after accounting for additional receipts from taxes on fuel exports.

The possible shortfall makes collections from other tax categories particularly important. Stronger direct tax and GST revenue, together with improved customs receipts, are expected to help compensate for the pressure on excise duty collections.

The extent to which these revenue streams can offset the potential loss will be a key factor in determining whether the Centre meets its budgeted net tax revenue target.

Customs Receipts Expected to Provide Additional Support

Customs revenue is expected to contribute further support to the government’s finances. An improvement in customs receipts, combined with the performance of direct taxes and GST, could help balance weaker-than-expected collections from fuel-related excise duties.

The government’s assessment suggests that the overall tax revenue target remains achievable despite differences in performance across individual tax categories.

However, the projection is not a final outcome. Collections during the remainder of FY27 will determine whether the improvement in major tax streams is sufficient to make up for any revenue shortfall elsewhere.

Centre Begins Preparations for FY28 Budget

While monitoring current-year revenue, the Centre has also begun preparations for the Union Budget for FY28. According to official sources cited by NDTV Profit, the budget exercise began on October 12.

Revenue projections for the next financial year will be based on detailed calculations carried out during the budget preparation process.

The government also faces the task of maintaining its fiscal consolidation plans. The FY27 Budget has set the fiscal deficit target at 4.3% of gross domestic product (GDP), alongside capital expenditure of Rs 12.22 lakh crore.

Meeting the revenue target will therefore be an important part of the Centre’s broader fiscal plans. Strong tax collections can support the government’s spending commitments, while the final revenue position will depend on how collections evolve through the rest of the financial year.

For now, robust direct tax receipts, sustained GST growth and the expected contribution from customs revenue are supporting the government’s expectation that it can meet its FY27 net tax revenue target of Rs 28.7 lakh crore.