In the assessment year 2021-22 (financial year 2020-21), the income tax department’s latest time series data reveals that 589 taxpayers reported gross total incomes exceeding Rs 500 crore. In the same year, nearly 2.1 crore taxpayers paid taxes but did not file their returns, signifying a notable increase compared to the preceding year.
The number of taxpayers with gross total incomes exceeding Rs 500 crore rose by nearly 34% in the assessment year 2021-22, up from the 441 entities that reported such incomes in the previous year. During the assessment year 2020-21, around 1.6 crore taxpayers paid their taxes without filing returns. This year, almost 6.7 crore returns were filed within the specified period.
It’s important to note that direct taxes encompass income and corporation taxes, and among the 589 entities with gross total incomes exceeding Rs 500 crore, 554 were companies that filed returns. This marks an increase from the previous year when there were 413 such companies. However, the number of individuals reporting gross incomes exceeding Rs 500 crore decreased from 12 in the assessment year 2020-21 to seven in the assessment year 2021-22. The remaining 589 were comprised of Hindu Undivided Families (HUFs), firms, associations of persons, and others. These statistics were derived from e-filed returns up to March 31, 2023.
Tax experts attribute the surge in both returns and incomes to robust economic growth, increased corporate profits, higher household incomes, and the more effective utilization of big data and technology by tax authorities.
Dinesh Kanabar, CEO of Dhruva Advisors, explained, “There are two or three key reasons for this. One is that corporate profits have been robust and they have grown in the past few years. There has also been an increase in the number of households with Rs 10 lakh income – in fact they have grown three times over the past four years.” He also noted the significant role of technology in this growth, with every transaction being taxed and the implementation of tax collection at source, even for overseas travel.
R Prasad, former chairman of the Central Board of Direct Taxes, attributed the improvement in tax collections to corporate profits, emphasizing that nearly 45% of direct tax receipts come from tax deducted at source. Additionally, the tax department has taken various measures to enhance collections and address gaps, with the use of GST data aiding the matching of numbers.
The most recent data also revealed a substantial increase in income tax returns filed by individual taxpayers over the past years. Between the assessment years 2013-14 and 2021-22, returns filed by individual taxpayers surged by 90%, rising from 3.4 crore in 2013-14 to 6.4 crore in 2021-22. In the current fiscal year, 7.4 crore returns have already been filed for assessment year (AY) 2023-24, including filings from 53 lakh new taxpayers.