Taxpayer base soars, but return filings lag sharply: CBDT data

India’s income tax base is growing faster than the number of those conscientiously filing returns, driven by the expanding reach of the tax deducted at source (TDS) system, according to latest data from the central board of direct taxes (CBDT).

- Gireesh Chandra Prasad

In assessment year 2024-25, covering income earned in FY23-24, the total taxpayer base jumped 17% year-on-year to 116.1 million, while the number of returns filed was at a low.

8.08 million, up 5.9% yo-y, CBDT data released earlier this week showed.

The trend is consistent over the past four years and the gap has widened, CBDT data showed. Total taxpayer base refers to both return filers and those with TDS deducted.

CBDT chairman Ravi Agrawal told the media on 17 November that the tax authority was hopeful of meeting its ₹25.2 trillion direct tax collection target this year and that it was connecting with taxpayers through emails wherever gaps have been noticed.

In FY25, total TDS collection accounted for 35% of the ₹27 trillion gross direct collection, although it is not known what share of TDS collection is from those who did not file returns or their tax liability.

Greater TDS coverage indicates greater oversight of economic activity, which enables the Income Tax department to prefill tax returns based on transactions it is aware of, inform tax payers about TDS deducted transactions so that they do not miss out any income while filing returns, and run campaigns by reaching out to assessees for greater voluntary compliance.

Return filing is essential for claiming tax refunds.

Experts point to various reasons why the gap is increasing.