In a major positive indicator for India’s economic growth, the number of individuals and entities filing income tax returns witnessed a substantial surge in the fiscal year 2022-23, as reported by Finance Minister Nirmala Sitharaman. According to official figures, the number of taxpayers increased by an impressive 6.18 per cent compared to the previous fiscal year, reaching a remarkable total of over 7.40 crore.
The Finance Minister’s announcement highlighted that the growth in income tax filers signifies a noteworthy expansion of the country’s tax base. This surge in tax compliance is a positive signal, indicating a broader participation in the formal economy and a strengthened tax administration system. The government’s efforts to widen the taxpayer base have been bearing fruit, as evident from the rising number of individuals and entities stepping forward to fulfill their tax obligations.
A notable aspect of this surge in tax filings is that approximately 5.16 crore of the total filers declared zero tax liability. This indicates that a substantial portion of the new entrants into the tax net comprises low-income individuals and small businesses, who may be exempted from paying taxes due to their income levels falling within the tax-free threshold.
The Finance Minister also shed light on India’s direct tax collection performance during the 2022-23 fiscal year. The country witnessed a commendable growth of 20.33 per cent in gross direct tax collection, amounting to over Rs 19.68 lakh crore. This substantial increase in tax revenue showcases the government’s steadfast commitment to fiscal discipline and prudent tax management.
The surge in direct tax collections can be attributed to several factors. Firstly, the robust economic recovery witnessed during the fiscal year played a crucial role in boosting income levels and corporate profits, leading to higher tax liabilities for many taxpayers. Additionally, the increased compliance and widening of the tax base further contributed to the significant growth in tax collections.
The government’s focus on digitalization and the implementation of several taxpayer-friendly measures have played a pivotal role in encouraging more people to file their income tax returns. The ease of tax filing through online portals and simplified processes has made tax compliance more accessible for individuals and businesses alike. This has resulted in higher voluntary compliance, reducing the tax gap and improving overall tax revenue collection.
Furthermore, the increased scrutiny and enforcement actions by the tax authorities have acted as a deterrent against tax evasion. As a result, more taxpayers are coming forward to report their income and assets accurately, thereby contributing to the growth in tax collections.
The Finance Minister also highlighted the importance of this growth in tax revenue in funding various developmental and welfare projects across the nation. The substantial increase in direct tax collections provides the government with the necessary financial resources to invest in critical sectors like healthcare, education, infrastructure, and social welfare programs, ultimately benefiting the citizens of India.
The remarkable surge in the number of individuals and entities filing income tax returns in the fiscal year 2022-23 is a testament to the success of the government’s efforts in widening the tax base and promoting tax compliance. The majority of new tax filers declaring zero tax liability indicate the inclusion of previously unreported segments of the economy. This, coupled with the impressive 20.33 per cent growth in gross direct tax collection, demonstrates a robust economic rebound and a positive outlook for India’s fiscal health. The increased tax revenue will play a crucial role in fostering the nation’s growth and development, providing the government with the means to implement essential projects and initiatives for the welfare of its citizens.