Income Tax Refunds Decline Amid Enhanced Fraud Prevention Measures
New Delhi: Income tax refunds have seen a significant decline of 16% so far this fiscal year, as authorities have implemented stringent filters for payments above a specified threshold to combat fraudulent claims.
Latest data released by the Central Board of Direct Taxes on Monday highlighted that, between April and October 12, gross direct tax collections have risen by 2.4%, amounting to Rs 13.9 lakh crore, largely influenced by a sharp reduction in personal income tax rates. In the same period, refunds plummeted from over Rs 2.4 lakh crore to just above Rs 2 lakh crore, with non-corporate tax refunds nearly halving to Rs 62,359 crore, down from over Rs 1.2 lakh crore in the corresponding period last year.
Direct Tax Collection Overview (as of October 12, 2025)
| Tax Type | FY25 (in crore) | FY26 (in crore) | % Change |
|---|---|---|---|
| Corporate Tax | 6,12,579 | 6,42,658 | 4.9 |
| Non-Corporate Tax | 7,14,638 | 7,18,324 | 0.5 |
| Securities Transaction Tax (STT) | 30,630 | 30,878 | 0.8 |
| Others | 2,180 | 301 | -86.2 |
| Total | 13,60,027 | 13,92,161 | 12.4 |
Source: Government Data
An official stated, “Due to automated validation and additional risk-assessment checks put in place at the Central Processing Centre (CPC) to prevent incorrect refund claims, which sometimes take extra time to ensure accuracy, all Income Tax Returns (ITRs) claiming refunds above a particular threshold are undergoing additional checks.” He added that the threshold varies depending on the category of taxpayers.
The decline in refunds has positively impacted net direct tax collections, which rose by 6.3% to nearly Rs 11.9 lakh crore thus far this year.
