Even as collections from the Securities Transaction Tax (STT) appear likely to fall short of the Budget target for FY26, the Central Government remains confident of achieving its ambitious Rs 25.2 lakh crore direct tax collection goal, buoyed by steady growth in personal income tax (PIT) revenues.
According to data released by the Income Tax Department on November 11, net direct tax collections (after refunds) stood at Rs 12.92 lakh crore between April 1 and November 10, 2025, marking a 7% year-on-year increase.
However, STT mop-up totalled Rs 35,681 crore, showing a decline from the corresponding period last fiscal and trailing far behind the budgeted estimate of Rs 78,000 crore.
Strong Personal Income Tax Growth Balances STT Decline
The non-corporate tax segment, primarily driven by personal income tax, has grown 8.7% so far this fiscal, outpacing the 5.7% growth recorded in corporate tax collections.
"Going by the current trend, collections should meet the target. We always keep our fingers crossed till the last minute because of cyclical ups and downs, but so far, it looks on track," a senior government official said.
He added that while STT collections are under pressure, robust PIT inflows have provided a crucial cushion. "STT may be lower this year, but as long as overall direct tax receipts hold up, we are comfortable," the official noted.
Market Volatility Impacts STT Receipts
Officials attribute the weaker STT growth to volatile market conditions and cautious investor sentiment, particularly during the market corrections witnessed in September and October.
"STT collections are always sensitive to market conditions. Some moderation was expected given the recent volatility. But income and corporate tax inflows have remained resilient," the official explained.
Despite fluctuating equity trading volumes amid global uncertainties, tax buoyancy driven by formal sector employment and business profitability continues to support the overall tax collection trend. The next advance tax instalment due in December is also expected to significantly boost collections.
Shortfall in STT Unlikely to Derail Fiscal Math
While the STT component may miss its Budget estimate, the government is not overly concerned."The shortfall in STT will not materially impact the overall fiscal arithmetic, as the broader direct tax base has expanded," a senior revenue department official clarified.
The Rs 25.2 lakh crore target for FY26 was set despite an estimated Rs 1 lakh crore revenue loss from tax reliefs announced in the Union Budget. Yet, the growth trajectory has been encouraging.
"The growth in PIT is particularly notable given that individuals earning up to Rs 12 lakh under the new regime effectively pay no tax after claiming the rebate. With limited revenue-generating measures in the last Budget, this reflects strong economic fundamentals," the source added.
What is Securities Transaction Tax (STT)?
The Securities Transaction Tax (STT) is a levy imposed on every purchase or sale of securities, including equity shares and derivatives, traded on recognised stock exchanges. STT collections tend to rise during bullish market phases when trading activity is high, but moderate when market volatility dampens investor participation.
STT forms part of the government's direct tax revenue, alongside corporate and personal income taxes, which together constitute over half of the Centre's gross tax receipts.
Outlook
With advance tax payments maintaining strong momentum and PIT growth offsetting the weakness in STT, the government remains optimistic about meeting its FY26 direct tax target. Officials believe that barring any major external shocks, the current growth trajectory will ensure that India's direct tax collections remain on track, underscoring the resilience of the economy and the expanding formal tax base.
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