IT e-returns witnesses rapid growth than the taxpayer base

The rapid growth in income tax – e return filed by all categories of tax payers during the last four years shows rising fulfilments, but there hasn’t been broad tax base. The influential taxpayer base has witnessed a slower growth against the e-returns filings, reported the Financial Express.     

The influential taxpayer base has widened by an average 9 per cent per year, recording tens digit growth rate from units digit during assessment year (AY) 2013-14 to 2017-18, while during those two years the e-returns filed grew by an average 25 per cent per year.     

The National Democratic Alliance government (NDA) often indicated the recent times’ sharp increase in the number as a signal of quick expansion of the tax base, and credited demonetization and increased efficacy of the tax management.   

Nonetheless, the increasing growth in e-return filings occurred primarily because of more current taxpayers filing returns than the growth in the number of taxpayers. During AY 2013-14, only above 56 per cent of those who paid taxed filed returns – this percent has risen to 91 in AY 2017-18, the Financial Express reported.

Moreover, the average tax paid by each firm/ person in the influential taxpayer base has remained between Rs 1 – 1.1 lakh during FY 12-13 to FY 16-17 as the same time the same among returns filed witnessed a substantial fall to Rs 1.22 lakh from Rs 1.88.

The growth track in direct tax collected approximately echoes the growth in influential taxpayer base, rather than the returns filed.

During the last five years the direct tax collections witnessed 18.6 per cent higher tax collections in FY18, assisted by the earnings from income disclosure schemes. The collection growth was way lower during FY15 (8.1 pc), and in FY16 (6.9 pc), even when the e-returns growth was strong at nearly 20 per cent.

The indifferent growth in influential taxpayer base is also hampering the centre’s mop up target for the current year which as per the revised estimate is worth Rs 12 lakh crore, 20 per cent higher than the previous year.

Previously the Financial Express reported, if the historical mop-up trend supplies any directions, some 65 per cent of the annual direct taxes gets collected during the initial nine months of a fiscal and the balance in the fourth quarter. This shows the personal income tax (PIT) collections in Q4FY19 could be Rs 1,85,150 crore, some Rs 52,000 crore lesser than the revised estimate requires. Similarly, the corporation tax (CIT) may also experience a deficit of Rs 13,000 crore against the RE.

(With agency inputs)