In a significant revelation, the Income Tax Department has unveiled a promising trend in taxpayer compliance and economic growth. The Time Series Data of Direct Taxes indicates a substantial increase in the number of Income Tax Returns (ITRs) filed, reflecting improved tax compliance and a widening tax base. Here’s a closer look at the key findings:
1. Impressive Rise in ITR Filings:
- Over the years, the number of ITR filings has seen a consistent and remarkable surge. The returns filed by individual taxpayers have surged from 3.36 crore in Assessment Year (AY) 2013-14 to an impressive 6.37 crore in AY 2021-22, marking a substantial increase of 90%.
2. Expanding Tax Base:
- Notably, the current fiscal year has witnessed a record 7.41 crore ITRs filed for AY 2023-24 to date, including 53 lakh first-time filers. This signifies a clear expansion of the tax base, a testament to the various reform measures implemented by the Income Tax Department.
3. Migration to Higher Income Groups:
- The data reveals a positive trend as individual taxpayers are migrating to higher ranges of gross total income. In the range of gross total income up to Rs. 5 lakh, there has been a 32% increase in the number of returns filed. In the Rs. 5 lakh to Rs. 10 lakh and Rs. 10 lakh to Rs. 25 lakh income categories, there have been significant increases of 295% and 291%, respectively.
4. Changing Income Landscape:
- A closer look at the gross total income of individual taxpayers for AY 2013-14 and AY 2021-22 underscores interesting changes:
- The contribution of gross total income by the top 1% individual taxpayers relative to all individual taxpayers has decreased from 15.9% to 14.6%.
- The contribution of gross total income by the bottom 25% individual taxpayers relative to all individual taxpayers has increased from 8.3% to 8.4%.
- The middle 74% group of individual taxpayers has seen an increase in their contribution from 75.8% to 77%.
5. Surge in Average Gross Total Income:
- The data shows an increase in the average gross total income for individual taxpayers, rising from approximately Rs. 4.5 lakh in AY 2013-14 to about Rs. 7 lakh in AY 2021-22, marking a significant 56% increase.
6. Robust Growth in Direct Tax Collections:
- The overall impact of these trends is reflected in the surge in net direct tax collections, which have grown from Rs. 6.38 lakh crore in FY 2013-14 to an impressive Rs. 16.61 lakh crore in FY 2022-23. This growth has been facilitated by taxpayer-friendly and progressive policies adopted by the Government.
The Income Tax
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