India Raises the Revenue Bar for FY27, Signals Confidence in Direct Taxes While Staying Guarded on Consumption - Kalinga TV
India has set a higher revenue ambition for FY 2026–27, underscoring growing confidence in income growth and corporate profitability, even as policymakers remain cautious on consumption trends and borrowing pressures. The government expects total receipts of about ₹53.5 lakh crore in FY27, a notable rise from nearly ₹49.6 lakh crore in the previous year, reflecting a more assertive fiscal stance going into the new financial year.
The revised outlook, outlined in the government’s budgetary receipts assessment for the year, shows a clear tilt toward direct taxes as the primary growth engine. Net tax revenue is projected to climb to around ₹28.7 lakh crore in FY27, up from ₹26.75 lakh crore in FY26 (revised). Within this, corporation tax collections are expected to increase from ₹11.09 lakh crore to ₹12.31 lakh crore, signalling expectations of resilient earnings across corporate India despite global headwinds. Income tax receipts are projected to rise from ₹13.12 lakh crore to ₹14.66 lakh crore, reinforcing the view that formal employment, wage growth, and tax compliance will continue to strengthen.
In contrast, the government’s assumptions on consumption-led revenues appear more restrained. GST collections are estimated at ₹10.19 lakh crore for FY27, marginally lower than ₹10.46 lakh crore recorded in FY26 (revised). The conservative projection suggests that policymakers are factoring in uneven demand conditions, persistent inflationary pressures, and a slower recovery in rural spending, even as urban demand remains relatively stable.
Non-tax revenue is expected to remain broadly flat at ₹6.66 lakh crore, close to last year’s level. However, the composition points to a growing dependence on dividends and surplus transfers from the RBI and public sector enterprises, which are projected to rise to ₹3.91 lakh crore. This approach allows the government to support its revenue position without leaning heavily on disinvestment or one-off asset monetisation.
Borrowings continue to play a structural role in the revenue framework. Capital receipts for FY27 are estimated at ₹17.81 lakh crore, compared with ₹15.77 lakh crore in FY26, with net market borrowings rising modestly to ₹11.73 lakh crore. While the increase is contained, it underscores the continued reliance on debt markets to finance expenditure, particularly as infrastructure spending and social commitments remain elevated.
Overall, the FY27 revenue projections reflect a government that is betting on durability rather than acceleration — stronger direct tax buoyancy, stable institutional payouts, and calibrated borrowing. The shift away from aggressive consumption assumptions marks a more grounded fiscal outlook.
As the year progresses, the success of this strategy will depend on whether income growth and corporate profitability translate into sustained tax collections. For now, the message from the government’s receipts outlook is unambiguous: India is raising the revenue bar, but doing so with measured expectations and an eye on fiscal balance.