As due date for filing income tax returns (ITR) for all categories of taxpayers except transfer pricing cases comes to an end in the next fortnight, the number of filers is set to exceed in the current Assessment Year (2024-25 or AY25) by a good margin as compared to the previous Assessment Year (2023-24 or AY24). However, the growth in ITR 1 category, which has the maximum share in overall filing, is witnessing stagnant growth on AY-basis and de-growth on fiscal year basis.

Experts attribute the rise in filing to simplification and digitalisation as reasons for significant rise in filers.

According to e-filing portal of Income Tax Department, total e-returns filed between April 1 and October 31 has touched over 8.11 crore for AY25 as against 7.65 crore during corresponding period of last AY. Now, due date for two categories of tax assesses – individuals & businesses audit cases and businesses requiring transfer pricing reports (in case of international/specified domestic transactions), is closing this month. Then belated return in all categories can be filed till December 31. All these are expected to further contribute in number of filers. During the last AY, total number of filers was over 8.30 crore

According to Suresh Surana, Mumbai-based chartered accountant, measures to simplify the ITR filing process, including user-friendly online platforms and e-filing utilities have made it easier for taxpayers to comply with their obligations. He said widespread adoption of digital payments and reporting mechanism across India has led to a notable increase in financial transparency. This shift has brought many previously unreported transactions into the tax framework, resulting in an expanded taxpayer base.

Income sources

Surana attributed the subdued growth in ITR 1 to multiple reasons including an increase in taxpayers’ income sources (capital gains, other income, more than 1 house property, etc) or the foreign assets (ESOPs granted by employers, etc.) which has necessitated a shift for many individuals from filing ITR-1 to ITR-2.

He said many taxpayers now report profits or losses from their respective businesses. ITR-1 does not accommodate the reporting of business income, meaning that individuals with business-related income are required to file ITR-3.

Taxpayers who own more than one house property are required to file ITR-2, as ITR-1 allows the reporting of income from only a single house property.

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