The expansion of the taxpayer base is crucial for sustaining revenue growth and ensuring fiscal stability. In response to this imperative, the Government of India, under the Ministry of Finance, has implemented various measures to encourage tax compliance and enhance the participation of individuals and businesses in the tax system. This article provides a comprehensive analysis of the government’s efforts to increase the number of taxpayers in the country.
Detailed Analysis
1. Assessment of High-Income Individuals: The Ministry of Finance has been monitoring the number of individuals with annual incomes exceeding one crore rupees. The data indicates a steady increase in the number of high-income earners over the past five years, reflecting economic growth and income expansion.
2. Professional Taxpayers: The government has also tracked the number of individuals reporting ‘Profession’ as one of their nature of business. The trend shows a consistent rise in the number of professional taxpayers, suggesting a growing participation of professionals in the formal economy.
3. Initiatives to Boost Tax Compliance:
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- New Form 26AS: The introduction of Form 26AS provides taxpayers with comprehensive information on tax deductions, specified financial transactions, and tax payments. This initiative enhances transparency and encourages taxpayers to accurately disclose their income.
- Pre-filling of Income-tax Returns: Pre-filled income tax returns streamline the tax filing process by automatically populating relevant taxpayer information. This simplification initiative reduces errors and promotes timely compliance.
- Updated Return Scheme: The provision for updating tax returns within two years allows taxpayers to rectify errors or omissions voluntarily. Additionally, the e-verification scheme facilitates the disclosure of unreported income, promoting tax transparency.
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- Corporate Tax Rate Reduction: Gradual reduction in corporate tax rates, coupled with the phasing out of exemptions and incentives, aims to broaden the corporate taxpayer base and stimulate investment.
- Simplification of Personal Income-tax: The option for individual taxpayers to opt for lower slab rates without availing specified exemptions promotes tax efficiency and incentivizes compliance.
- Expansion of TDS/TCS Scope: The expansion of Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) provisions targets new taxpayers by incorporating transactions like cash withdrawals, foreign remittances, and e-commerce activities.
The Government of India’s initiatives to increase the taxpayer base reflect a multi-faceted approach encompassing policy reforms, technological enhancements, and simplification measures. By leveraging digital solutions, promoting transparency, and incentivizing compliance, these efforts aim to foster a culture of tax responsibility and contribute to the country’s economic development. Continued implementation and evaluation of these strategies are essential for achieving sustainable revenue growth and financial resilience.
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GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
RAJYA SABHA
UNSTARRED QUESTION NO. 398
ANSWERED ON – 06/02/2024
‘TAX PAYERS IN THE COUNTRY’
- SMT. PHULO DEVI NETAM:
Will the Minister of FINANCE be pleased to state:
(a) the number of persons having annual income exceeding rupees one crore in the country, the details thereof for the last five years;
(b) the number of professional tax payers out of such people, the details thereof for the last five years; and
(c) the details of efforts being made by Government to increase the number of tax payers?
ANSWER
(MINISTER OF STATE IN THE MINISTRY OF FINANCE)
(SHRI PANKAJ CHAUDHARY)
(a) The assessment-year wise number of individuals submitting an e-Return with returned income of more than Rs. 1 crore is as under:
| Assessment Years | Number of Individuals |
| 2019-20 | 1,09,707 |
| 2020-21 | 1,19,232 |
| 2021-22 | 1,27,256 |
| 2022-23 | 1,87,905 |
| 2023-24 | 2,16,217 |
Note: The e-Returns of AY 2019-20 and AY 2020-21 have been taken upto 31-May-2021 and the e-Returns of AY 2021-22, 2022-23 and 2023-24 have been taken upto 31-Dec-2023.
(b) Total number of individuals reporting ‘Profession’ as one of their nature of business is as under:
| Assessment Year | Number of individuals |
| 2019-20 | 6,555 |
| 2020-21 | 7,011 |
| 2021-22 | 6,853 |
| 2022-23 | 10,528 |
| 2023-24 | 12,218 |
NOTE: (i) ITR-1 and ITR-2 does not have option for specifying nature-of-business in these ITRs.
(ii) Annual income includes income from profession as well as other heads of income.
(c) Efforts made by the Government to increase the number of taxpayers are as under –
(i) New Form 26AS – This new form contains all information of deduction or collection of tax at source, specified financial transaction (SFT), and payment of taxes, demand and refund etc. Further, details of SFT data in the Form 26AS makes taxpayer aware about their transactions beforehand and encourages them to disclose their true income.
(ii) Pre-filling of Income-tax Returns – In order to make tax compliance easier pre- filled Income tax Returns (ITR) have been provided to individual taxpayers. The scope of information for pre-filing includes information such as salary income, bank interest, dividends, etc.
(iii) Updated Return – Section 139(8A) of the Income-tax Act, 1961 (the Act) facilitates the taxpayer to update his return anytime within two years from the end of the relevant assessment so that he can file an updated return by voluntarily admitting omissions or mistakes and paying an additional tax as applicable. Further, e- verification scheme was launched to allow tax-payers to disclose their unreported or under-reported income in the updated ITR.
(iv) Reduction in the Corporate tax rate – Starting from the Finance Act, 2016, the corporate tax rates have been gradually reduced while phasing out the exemptions and incentives available to the corporates so as to increase the tax base.
(v) Simplification of the Personal Income-tax – Finance Act, 2020 provided an option to individual taxpayers for paying income-tax at lower slab rates if they do not avail specified exemptions and incentives.
(vi) Expansion of scope of TDS/TCS – For bringing new tax-payers into the income-tax net, scope of TDS/TCS was expanded by including huge cash withdrawal, foreign remittance, purchase of luxury car, e-commerce participants, sale of goods, acquisition of immovable property, purchase of overseas tour program package, etc.
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