Indirect tax mop-up tops FY26 target, but pan masala cess misses the mark

New Delhi: The government has marginally exceeded its indirect tax collection target for 2025–26, buoyed by steady inflows from customs, excise and GST, even as collections from a key cess on pan masala fell short of expectations, an official said on Thursday.

As per Revised Estimates (RE), total indirect tax collections — comprising customs duty, excise duty and Central Goods and Services Tax (CGST) — were pegged at over Rs 15.52 lakh crore for FY26. This included Rs 2.58 lakh crore from customs, Rs 3.38 lakh crore from excise, and Rs 9.58 lakh crore from CGST.

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Without disclosing the final figures, the official said collections broadly outperformed projections. Revenues from customs duty came in at 102% of RE, while excise duty collections reached 101% of RE. CGST collections were at 100.8% of RE.

“Overall, GST plus non-GST collection came in at 101.2 per cent of RE,” the official said.

The modest overperformance reflects resilient consumption and stable tax compliance trends through the fiscal year, helping the government edge past its aggregate target.

However, not all components met expectations. Collections from the health and national security cess — levied on pan masala manufacturing — significantly undershot projections.

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The RE had estimated Rs 2,330 crore from the cess in FY26, but actual collections came in at just 63% of the target.

Introduced under the Health and National Security Cess Act and effective February 1, 2026, the levy is imposed on the manufacturing capacity of pan masala units, over and above the highest 40% GST slab.

The official said the shortfall was likely transitional, with collections expected to strengthen as the new levy stabilises. For the current fiscal, the government has budgeted a sharp increase, targeting Rs 14,000 crore from the cess.