Contraction in direct tax collection narrowed significantly in November on the back of considerable improvement in personal income tax and corporation tax mop up, pointing at further improvement in economic activity and jobs availability in the third quarter of the fiscal year.

Direct tax collections, net of refunds, declined by 25 per cent by end of November, an improvement from the 31.4 per cent decline in September. Improved collections will come as a respite for the Centre as it faces spending pressure to spur economic activity.


Personal income tax saw contraction shrink to 13 per cent by November from 22 per cent seen up to September, on the back of lower issuance of refunds and improvement in economic conditions. Decline in corporation tax collection eased slightly to 36 per cent by November, from 40 per cent by September. The impact of base effect on account of corporation tax reduction in September last year will be largely visible in December when the third installment of advance tax collections come in by the middle of the month.