NEW DELHI: Despite being home to the largest population in the world, India sees a relatively small percentage of its citizens filing income tax returns (ITRs). Recent data reveals that only 6.68% of the population filed ITRs for the financial year 2023-24, according to a written reply by Minister of State for Finance, Pankaj Chaudhary, in the Rajya Sabha.
In absolute numbers, over 8.09 crore ITRs were filed in FY 2023-24, marking an increase from 7.40 crore in FY 2022-23. The steady growth in ITR filings can be traced back to 6.96 crore in FY 2021-22 and 6.72 crore in FY 2020-21. However, the percentage of tax filers remains strikingly low for a nation of over 140 crore people.
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Interestingly, a significant chunk of these filings reported zero taxable income. In FY 2023-24, 4.90 crore individuals declared no taxable income, a rise from 4.64 crore the previous year.
This highlights that many individuals may not fall under the taxable bracket but are still filing returns, indicating improved compliance and awareness about the importance of ITRs.
Income tax filing is a legal obligation and a vital mechanism for assessing the government’s revenue. Individuals and companies can choose from seven types of ITR forms based on their income sources. Filing must be completed within specified deadlines, although extensions are granted in exceptional circumstances.
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The government’s focus on simplifying tax processes and increasing digital awareness has contributed to the rise in ITR filings. Yet, the challenge remains to bring more Indians under the tax net.