In 6 charts: Budget report card on income tax, F&O risks, and tourism revival

Finance minister Nirmala Sitharaman presented the Union Budget for 2025-26 on Saturday. The Budget presents a chance for the government to show its intent on some of the burning issues of our times. In this four-part series, we use charts to illustrate how the Budget performed on 15 key concerns.

This part looks at income tax receipts, tourism, and the securities transaction tax. Each topic has a pair of charts—one presenting the context the Budget faced, and the other showing what Sitharaman delivered. 

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The importance of income tax

The number of income tax returns (ITRs) filed by taxpayers in India has rapidly increased in recent years, reflecting higher compliance. In tandem, the Centre’s income tax collections have also shown strong growth, driven by India's growing tax base, improved enforcement, and digitization. Moreover, the Centre's income tax mop-up has surpassed Budget targets over the past few years and is one of the major sources of tax collections.

The derivatives curbs

Recent regulatory curbs on derivatives trading have significantly reduced future and options (F&O) turnover. This decline could threaten Securities Transaction Tax (STT) collections, a key source of the Centre’s revenues, previously boosted by booming speculative trading. The previous budget increased STT on F&O transactions to discourage losses in the market, which had led to an increase in STT collections. However, the decline in F&O trading could potentially impact the mop-up in the future.

Tourism revival

Even five years after the covid-19 pandemic, India’s tourism industry is looking for a revival, with foreign tourist arrivals still below the pre-pandemic level. Although the government has set an ambitious target of 100 million foreign tourist arrivals by 2047, the number has only been slightly above 10 million in the best years. More needs to be done by the tourism ministry, which has underspent its budget over the years.