Centre Expects Mild Tax Shortfall After GST Cuts, Non-Tax Revenue to Bridge Gap

Last updated: 26 November 2025

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The Central Government is bracing for a slight shortfall in tax revenues for the current financial year. This is attributed to recent GST rate reductions, income tax relief measures, and subdued global demand impacting corporate tax collections. However, officials remain optimistic about meeting the fiscal deficit target of 4.4% of GDP, projecting that increased non-tax revenue and savings from flagship schemes will bridge the gap. A clearer financial picture is expected after mid-December, following the assessment of advance tax payments and post-festive GST trends.

The Central Government is preparing for a marginal shortfall in tax collections for the current financial year as recent GST rate cuts, income-tax relief measures and weak global demand weigh on revenue inflows, especially from corporates, senior officials said. Despite this, the Centre remains confident of meeting its 2025-26 fiscal deficit target of 4.4% of GDP, supported by stronger non-tax revenue and expenditure savings across flagship schemes. Officials said a clearer picture will emerge

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FAQ :

The government anticipates a tax shortfall due to recent GST rate cuts, income tax relief measures, and weaker global demand affecting corporate tax collections.

Yes, the government remains confident of meeting its 2025-26 fiscal deficit target of 4.4% of GDP, supported by stronger non-tax revenue and expenditure savings.

A clearer picture is expected to emerge after December 15, once third-quarter advance tax payments and post-festive GST trends are fully assessed.

Between April 1 and November 10, net direct tax collection rose nearly 7% year-on-year, although this is behind the budgeted growth target.

Yes, the GST rate cuts effective September 22 triggered strong festive-season buying across various categories like automobiles and consumer electronics.

While GST collections are up 7.1% year-on-year until October, this is below the budgeted 11% growth, partly due to easing inflation and the potential softening of demand after the festive season.

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CCI News Desk

Finance news reporter covering taxation, GST, income tax, business compliance, and economy updates. I simplify complex financial topics into easy-to-understand articles for professionals, taxpayers, and business owners on leading finance and tax platforms.

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