The effective taxpayer base — which includes those who pay taxes but don’t file returns — has seen a slower growth compared with e-return filing.
The income tax e-returns filed for the April-February period has grown nearly 30% compared with the corresponding period in FY18.
While almost 6.4 crore taxpayers filed returns in the first 11 months of the fiscal, the government is expecting 7.6 crore returns to be filed by the end of FY19 against 6.7 crore in FY18.
In the last three fiscals, March alone has seen 0.8 crore (FY16), 1.1 crore (FY17) and 1.85 (FY18) crore e-returns being filed. The surge is seen after the I-T department started sending notices to people who are involved in high-value transactions but don’t file returns.
For the current fiscal, the I-T department launched the non-filers management system and identified persons who had engaged in high-value transactions but failed to file I-T returns. In the first 15 days since its launch, 33,000 persons filed returns for the first time while
3 lakh people visited the e-filing website to check notices from the department.
During the April-February period of the last two fiscals, the growth was more lower at 27%, 20% and 17% in FY 16, FY 17 and FY 18, respectively. At the end of FY14, only 3.8 crore e-returns had been filed.
The government has often credited demonetisation as one of the primary reasons for doubling of I-T returns.
But as FE reported earlier, the stellar growth in I-T e-returns filing by all categories of taxpayers over the last four years indicates higher compliance but not as much a widening of the tax base. The effective taxpayer base — which includes those who pay taxes but don’t file returns — has seen a slower growth compared with e-return filing.
While the number of e-returns filed between assessment year (AY) 2013-14 to AY2017-18 grew by an average 25% per year, the effective taxpayer base expanded by an average of 9% only, registering double-digit growth rates in only two of these years.
The tepid growth in effective taxpayer base is also threatening the government’s mop-up target for this fiscal which according to the revised estimate (RE) is pegged at `12 lakh crore, 20% higher than last fiscal.
As FE reported earlier, if the historical mop-up trend serves any guidance, some 65% of the annual direct taxes get collected in the first nine months of a fiscal and the balance in the fourth quarter. That means the personal income tax collections in Q4FY19 could be `1,85,150 crore, some `52,000 crore less than what the RE requires. Similarly, the corporation tax (CIT) may witness a shortfall of Rs 13,000 crore against the RE.