The Income Tax Department of India released Time Series Data of Direct Taxes and Income Tax Return Statistics on October 26, revealing a notable increase in taxpayer compliance and direct tax collections over recent years.
The data highlights a consistent upward trajectory in the number of Income Tax Returns (ITRs) filed by individual taxpayers. Over the last decade, the number of ITR filings has surged, reaching 6.37 crore in Assessment Year (AY) 2021-22, marking a substantial 90% increase from 3.36 crore in AY 2013-14.
For AY 2023-24, this upward trend continues, with 7.41 crore ITRs filed, including 53 lakh first-time filers, signifying a significant expansion of the taxpayer base. This expansion can be attributed to various reforms introduced by the Department to simplify the tax process.
Importantly, the rise in individual taxpayer compliance is not limited to a specific income range but spans various brackets of gross total income. In the income range up to ₹5 lakh, the number of returns filed by individual taxpayers increased from 2.62 crore in AY 2013-14 to 3.47 crore in AY 2021-22, showing a 32% growth. This includes individuals with income below the taxable limit who may not have filed returns previously.
Additionally, the data reveals substantial increases in ITRs filed by individual taxpayers with gross total income in the ranges of Rs. 5 lakh to ₹10 lakh and ₹10 lakh to ₹25 lakh, growing by 295% and 291%, respectively, from AY 2013-14 to AY 2021-22, indicating a positive trend of individuals moving towards higher income brackets.
A closer examination of the gross total income for individual taxpayers in AY 2013-14 and AY 2021-22 yields several noteworthy findings:
- The proportionate contribution of gross total income from the top 1% of individual taxpayers, in comparison to all individual taxpayers, decreased from 15.9% in AY 2013-14 to 14.6% in AY 2021-22.
- The proportionate contribution of gross total income from the bottom 25% of individual taxpayers increased from 8.3% in AY 2013-14 to 8.4% in AY 2021-22.
- The proportion of gross total income from the middle 74% group of individual taxpayers increased from 75.8% to 77% during the same period.
In addition to these positive trends, the average gross total income for individual taxpayers saw a collective increase of 56%, rising from approximately ₹4.5 lakh in AY 2013-14 to around ₹7 lakh in AY 2021-22.
The increase in average gross total income for the top 1% of individual taxpayers is 42%, while for the bottom 25% of individual taxpayers, it is an impressive 58%.
These statistics underscore substantial income growth among individuals across various income groups since AY 2013-14, ultimately leading to a substantial rise in net direct tax collections.
Net direct tax collections have surged from ₹6.38 lakh crore in the financial year 2013-14 to an impressive ₹16.61 lakh crore in the financial year 2022-23.
This remarkable progress can be attributed to the government’s taxpayer-friendly and progressive policies, aiming to enhance transparency, efficiency, and trust-building efforts with taxpayers and stakeholders, as stated by the Ministry of Finance.