ITR filing: In the fiscal year 2024-25, the number of individuals filing income tax returns (ITRs) with income exceeding Rs 1 crore has seen a significant rise, increasing by 43% from previous figures. The total count of ITR filers has grown to over 9.05 crore, marking a 6.8% increase compared to the previous fiscal year. This surge reflects the broader trend of improving compliance and enforcement within the tax system, alongside India's robust economic growth, particularly in sectors such as technology, finance, and real estate. These sectors have contributed to increased incomes, pushing more individuals into the higher income bracket.
The increase in high-income ITR filers from 2.24 crore in FY21 to over 3.21 crore in FY25 can be attributed to several factors. Legal reforms like the Goods and Services Tax (GST) and technological advancements in reporting have enhanced transparency and compliance. “Interplay of legal introductions like GST, as well as adoption of technology in terms of multiple PAN-based reporting by banks, financial institutions, etc, which are reflected in taxpayers, account in form 26AS as well as AIS and frequent email and SMS follow-ups from the income tax department has resulted in a lot more transparency and therefore, an overall increase in compliance in terms of tax filings," Ashish Mehta, Partner at Khaitan & Co told Businessline.
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Additionally, the Central Board of Direct Taxes (CBDT) has extended the deadline for filing revised and belated income tax returns to 15 January 2025. "Timeline has been extended to file the revised and belated income tax return to January 15, 2025, for resident individuals vide CBDT circular dated December 31," noted Sanjoli Maheshwari, Executive Director at Nangia Andersen India. This extension allows taxpayers who missed the initial deadline to complete their filings, further enhancing compliance levels.
India’s economic performance has been a significant driver of the increase in ITR filings. "India has been experiencing robust economic growth in recent years, specifically in sectors like technology, finance and real estate, wherein it has been experiencing a boom leading to significant income growth for Individuals with higher salaries," said a financial expert. These sectors have seen a boom, leading to significant income growth for individuals, subsequently increasing the number of high-income earners required to file ITRs.
Several contributing elements have facilitated this growth in taxable income, including increased per capita income, the introduction of taxes on long-term capital gains, and taxes on dividends directly paid by individuals. Such measures have brought more high-income earners into the tax net, reflecting their growing financial prosperity and compliance with tax obligations. With the value of real estate and the prevalence of high-paying jobs on the rise, the landscape of tax filing in India continues to evolve, mirroring the country's economic trajectory.
According to government data released in October 2024, there has been a significant increase in the number of individuals reporting taxable income over Rs 1 crore in their tax returns. The data shows that this number has increased fivefold, from 44,078 in the assessment year (AY) 2013-14 (financial year 2012-13) to just under 230,000 in AY2023-24 (FY23). Additionally, the number of individual tax returns filed more than doubled during the same period, increasing from 30.3 million to over 75 million, as per recent data from the tax department.
In the most recent assessment year, salaried individuals accounted for nearly 52 per cent of those declaring income exceeding Rs 1 crore, a slight increase from previous years. Within the Rs 1-5 crore income range, salaried individuals comprised 53 per cent of the total. However, as income levels rose, the proportion of salaried individuals decreased, indicating a higher presence of business owners and professionals in the higher income brackets.
During the assessment year 2013-14, only one individual reported income exceeding Rs 500 crore, with two falling within the Rs 100-500 crore range. In contrast, the latest assessment year, AY2022-23, witnessed a slight decrease in the number of individuals disclosing income above Rs 25 crore, dropping from 1,812 to 1,798. Similarly, a decline of 4.7% was noted among salaried individuals in the over Rs 10 crore income bracket, decreasing from 1,656 to 1,577.