In tax records, the marked rise of companies reporting zero income

Fewer than 1,000 firms have reported income of more than Rs 500 crore

The number of companies filing Income Tax returns topped 1 million for the second year in a row in assessment year 2023-24. A majority of them reported zero income.

Fewer than 600,000 companies filed Income Tax returns in assessment year 2012-13. The assessment year typically captures income recorded in the previous financial year; all the yearly data in this analysis refers to the assessment year. More than 1.02 million companies filed returns in 2022-23. It rose to 1.07 million in 2023-24, according to data released on Tuesday. Over 600,000 companies or 56.5 per cent of the total tax filers recorded zero income (chart 1). 

Zero income can reflect companies setting off losses against profits. Companies set off Rs 3.7 trillion worth of losses against their income of Rs 38.3 trillion in 2023-24. Granular data on the number of companies that recorded zero income because of such set-off losses was unavailable. But a number of companies record very limited income. In addition to the 56.5 per cent of companies which recorded zero income, another 36.1 per cent recorded income of Rs 1 crore or less. Less than 8 per cent of companies recorded income of more than Rs 1 crore. Truly large companies, those recording more than Rs 500 crore in income, numbered less than 1,000 (chart 2).

The tax data also revealed differences in the nature of the income earned. Some sources have grown faster than others. Business income recorded in Income Tax filings has nearly doubled since the pre-pandemic year of 2018-19, up 99.3 per cent as of 2023-24. The fastest growth has been for capital gains. Income from capital gains, which can include money made from sale of physical properties in addition to income from other segments like the stock market, is up 335 per cent (chart 3). 

Even as the number of zero-income companies has gone up, the largest ones have recorded an increased share of the aggregate gross total income. A total of 353 companies earning above Rs 500 crore accounted for 55.7 per cent of the Rs 14.7 trillion in gross total income recorded by all companies in 2018-19. A total of 842 companies made more than Rs 500 crore in 2023-24 and accounted for 62 per cent of the Rs 34.6 trillion in gross total income recorded by all companies.