Number of income taxpayers in India has exceeded 10 crore, latest time series data from the Central Board of Direct Taxes (CBDT) showed. Data also revealed that after a gap of one year, tax buoyancy has again crossed 2, and is second highest in the last 14 years.

The Income Tax Department defines a “Taxpayer” as a person who has either filed a return of income for the relevant Assessment Year (AY) or in whose case tax has been deducted at source in the relevant financial year, but the taxpayer has not filed the return of income. Data showed that the number of taxpayers rose to 10.41 crore at the end of Assessment Year 2023-24 from over 5.26 crore at the end of Assessment Year 2013-14, a growth of nearly 98 per cent.

Widening tax base

Though the department has not given any reason for the rise, officials attribute this rise to formalisation of the economy and resultant widening of the tax base. “Widening of tax base occurs gradually as the formal sectors of the economy expand as more people enter the employment arena. There was a 10 per cent increase even during the covid impacted years. In the last two years, the rate of growth has been 17-20 per cent,” an official said.

Further, new opportunities for identification of potential taxpayers have opened up due to data mining and data analytics conducted by various wings of the Department. The effective utilisation of these data by field officers results in identification of a large number of potential taxpayers. The department is also focusing on high value consumption expenditure which needs to be verified with information about the taxpayer available with it.

“It is imperative to identify the sources which could be involved in possible circumvention, such as hotels, banquets, luxury brand retailers, IVF clinics, hospitals, designer clothing stores, NRI quota medical college seats, etc. Such sources have to be identified, and a verification exercise conducted by calling for information in a non-intrusive manner,” another official said.

With the increase in number of taxpayers, number of return filers (excluding revised returns) has also gone up. Data showed over 3.31 crore returns filed during FY2013-14, which rose to 8.09 crore in FY 24, showing a growth of 144 per cent.

Tax Buoyancy

Tax buoyancy rationed 2 plus level in Fiscal Year 2023-14. An International Monetary Fund (IMF) working paper defines tax buoyancy as a measure of the responsiveness of tax revenues to growth in nominal GDP and to discretionary changes in tax policies. It is the ratio of percentage change in gross tax revenue to percentage change in Gross Domestic Product (GDP) over the previous year. Further, it said, tax buoyancy is crucial for tax policy formulation.

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