Number of taxpayers rises nearly 14%, but returns filed fall 2% in FY19

The number of Income Tax returns filed fell by almost two per cent, while those filing returns and the number of taxpayers rose 16 per cent and around 14 per cent respectively in the 2018-19 financial year, according to a new set of data released by the direct taxes board. 

The number of returns filed declined to 67.3 million in FY19 year-on-year from 68.7 million in the previous year. At the same time, the number of return filers, including companies and individuals, rose to 63.3 million from 54.5 million over the same period. Besides, the number of taxpayers increased to 84.5 million from 74.2 million, revealed the time series data put out by the Central Board of Direct Taxes (CBDT). 

To explain the contrasting situation, officials said the number of returns filed dropped in 2018-19 due to a technical reason. Due to a change in law, returns of only the current assessment years can be filed FY19 onwards. This was not the case in previous years when the returns of two assessment years — the current assessment year and returns of the previous assessment year — could be filed. 

Also, the huge number of taxpayers at over 84 million is due to the fact that this category includes those who filed returns and those who have not filed returns but their taxes were deducted at source (TDS). 

The statistics also showed that direct taxes proportion to GDP has been rising over the years. While at the turn of the century, it had stood at just 3.25 per cent, it rose to 5.98 per cent in FY19. It had stood at 5.86 per cent in FY18. In between, it had stood at 6.3 per cent in 2007-08. 

However, growth in direct tax collections fell quite a bit to 13.54 per cent in FY19 from 17.93 per cent in FY18. 

Tax buoyancy rate, which indicates measure of efficiency and responsiveness of revenue mobilisation to growth in the gross domestic product, also fell to 1.21 in FY19 from 1.59 in the previous year. 

The cost of collecting taxes rose slightly to 0.62 per cent in FY19 from 0.61 per cent in the previous year. In FY19, Rs 11.4 trillion was collected from direct taxes, while Rs 7,074 crore was spent on collecting this money. As much as Rs 10 trillion was mopped up through direct taxes in FY18, while Rs 6,087 crore was incurred on mobilising that money. 

However, the cost of collecting direct taxes was quite an improved lot in FY19 against 1.36 per cent at the turn of the century.