Tax Revolution: Over 7.28 Crore ITR Filed by July End

A record-setting number of income-tax returns has been filed in India. ITR filing has reached a new level this year, with 7.28 crore people filing an ITR by 31^ST July 2024. The rise in the number shows that people are taking the tax rules seriously and becoming part of the formal economy.

Advancements in the e-filing portal and the frequently raised awareness made it easier for people to file ITR. More people filing ITR will benefit the country as it raises government revenue and enhances the effectiveness of tax policies.

Annual Tax Return Filing Over the Years

The number of income tax returns filed annually is a key indicator to be well known about the country’s economic activity and tax compliance. There has been a huge rise in the number of returns filed, reflecting economic growth and improved tax administration.

Let’s look at the number of ITRs filed over the years;

Assessment Year	Due Date	Number of Returns Filed
2020-21	10/01/2021	5,78,45,678
2021-22	31/12/2021	5,77,39,682
2022-23	31/07/2022	5,82,88,692
2023-24	31/07/2023	6,77,42,303
2024-25	31/07/2024	7,28,80,318

Record of ITR Filings in India for Assessment Year 2024-25

As mentioned above, 7.28 crore ITRs have been filed, which is 7.5% more than the previous year’s 6.77 crore ITRs. 5.27 crore ITRs were filed under the new tax regime, while 2.01 crore were filed under the old tax regime.

Meanwhile, 72% of the people shifted to the New Tax Regime, whereas 28% stuck with the old regime. On the day of the deadline for salaried taxpayers, July 31, over 69.92 lakh ITRs were filed on a single day.  The number of first-time filers was 58.57 lakh. More than 43.82 percent of these ITRs were submitted through the online ITR utility on the e-filing portal, and the rest were filed using offline methods.

Distribution of Return Filings for A.Y. 2024-25

ITR	Number and Percentage of ITR Filed
ITR-1	3.34 crore/ 45.77%
ITR-2	1.09 crore/ 14.93%
ITR-3	91.10 lakh/12.5%
ITR-4	1.88 crore/25.77%
ITR-5 to ITR-7	7.48 lakh/1.03%

Factors Contributing to the Increased Return Filings Top of Form

Various factors might have led us to record-breaking ITR filing this year. Some of them are listed below;

• Digitalization and E-Governance- The e-filing portal made it convenient and easy for many people to file ITR. More than 43.82 percent of these ITRs have been submitted through the online ITR utility on the e-filing portal.
• Mandatory Filing Requirements—Under the new tax rules, people who didn’t have to file an ITR must also file one now.
• Better Knowledge and Financial Literacy- People nowadays know the importance of tax filing and the penalties it’ll lead them to.
• Tax Benefits—Benefits such as deductions and exemptions are one reason for increased ITR filing, as individuals can reduce their taxable income and might get refunds.
• Improved Enforcement –The government has implemented strict rules to ensure that all individuals file the ITR. Data analysis tools are used to spot those who haven’t filed.
• Taxpayer Services- Services like helplines, chatbots, and online tutorials have made it easier for taxpayers to understand and complete their filings.
• Rise of Self-Employment and Gig Economy—The number of Freelancers and Independent Workers is rapidly increasing. They earn from various sources, and ITR filing is also necessary for them.

Government Initiatives/ Campaigns for Tax Filing

Undoubtedly, the government has taken several initiatives to encourage individuals to file their ITR. Some of the initiatives/ campaigns for tax filing are listed below;

• E-assessment scheme—The faceless assessment was introduced on 13 August 2020 to update the tax assessment system by eliminating face-to-face human interference. Thus, it promotes fairness, minimizes biases, and provides transparency through online procedures.
• PMJDY—The Pradhan Mantri Jan Dhan Yojana (PMJDY) is a government scheme that helps people easily access financial services. This scheme allows the government to track an individual’s financial activities and collect taxes.
• Vivad Se Vishwas Scheme—The scheme was launched to help people resolve their tax disputes. This further reduces litigation and penalties and makes the resolution process simpler and cheaper.
• DIN—Document Identification Number helps verify whether the document is from an authorized source. This aims to make tax filing secure and efficient for everyone.

Recent Enhancements to India’s E-Filing System for Taxpayers

 The Indian e-filing system has undergone significant enhancements to make the tax filing process smoother and more accessible for taxpayers. It focuses on simplifying the procedures and reducing effort. Some of them are given below:

• Pre-Filled Income Tax Returns—The government introduced pre-filled ITRs, and access has now been expanded. They simplify the tax filing process by pre-filling details such as income, TDS, and other relevant information.
• Auto-filling of Data- Information about you is filled in automatically from Form-16 and Form-26AS, making it much easier to fill out the form. It saves your time and the chances of errors.
• Extended Deadlines—In situations of calamities and emergencies, the government extends the time for filing ITR. This gives enough time for an individual struggling to file ITR for specific reasons.
• Improved Mobile Apps—You can easily use your phone to file your tax returns, track the process, and communicate with the tax department.
• Enhanced Verification—The verification process is now easier and safer. You can use OTP or Aadhar.

What are the Benefits of Return Filing?

Here, given below is the list of the most common benefits of income tax return filing:

• Legal Compliance- While adhering to the laws, you will be safe from penalties and legal issues.
• Financial Benefits- One can always file for a return in case an extra amount has been deposited, and filing returns makes it easy to secure loans and credit.
• Proof of Income—There are several situations where proof of income is needed, such as loan applications and visa processing. Here, tax filing is necessary.
• Tax Benefits- Filing ITR always comes with a tax benefit. You can always claim deductions/exemptions that reduce your taxable income.
• Avoiding Scrutiny- Filing ITR timely will prevent the interference of tax authorities for investigation purposes.
• Legal Protection- One will always be protected by the documents of tax filing as proof in case they get into any discrepancies relating to income tax.
• Economic Contribution—Taxes are the main source of revenue for the government. When you pay the tax, you’re directly involved in the country’s economic growth.

Tax planning is essential in current scenario and get ITR filed on time. It’s essential to connect with experts for help in tax planning and simplify the taxation experience.

Issues that might Arise because of Over 7.28 Crore ITR Filed

Some of the issues that might arise because of over 7.28 crore ITR filed are as follows:

• Processing Delays- Tax Authorities would likely face issues processing and reviewing the returns on time. This will need a system upgrade and a higher number of assistants.
• Data Security Concerns—With so much financial data, it’s important to keep it safe from misuse. Better processing technology and a cloud system will be needed to store the data safely.
• Technical Glitch/Performance-When several people open a system at the same time, it usually slows down, and the server crashes. This invites regular server maintenance and data backup.
• Increased Demand for Assistance-The number of individuals filing an ITR has increased, leading to increased demand for assistance. More services like helplines, chatbots, and online tutorials will help manage the concerns.
• Resource Allocation-When volumes increase, resources should also increase. It is crucial to manage the early and timely allocation of various resources, including human resources.
• Fraud Detection and Security– To protect against misuse and ensure accurate returns, it is essential to implement advanced security measures and sophisticated fraud detection algorithms.

Future Outlook of Tax Administration

The future of tax administration in India focuses on greater digitalization for efficiency and expanding the tax base for better transparency. For better understanding given below is the list of the future outlook of tax administration in India:

• Enhanced Digital Infrastructure: As 42% of people filed ITR via an online portal this year, the government might invest more in technology to keep it going and generate more returns in the future.
• Using Tax Data to Improve Policies- When the government gets more tax information from various sources. They can use the insights to amend rules and plan the economy more effectively.
• Updating Tax Rules—As more people start filing taxes, the government may make new changes to the rules according to their needs, easing the tax burden for every individual and encouraging tax filing.
• Advancements in Data Analytics—High tax filings will eventually lead the government to use better tools to handle data. They will use advanced tools to predict future tax revenue and address any issues that may arise. Algorithms are also used to detect accuracy and errors.
• Anti-Evasion Measures—With a large number of tax filings, the government will need advanced tools to find anyone trying to evade taxes. Hence, necessary measures will be taken.

Conclusion

Hence, the record of over 7.28 crore income returns filed this year shows better tax compliance and India’s growing economy. This increment came from better digital tools, tougher filing rules, and people’s financial awareness. Bringing a positive change also invites some challenges. Addressing the issues is necessary for maintaining the efficiency of tax filing. More tax filing shows a stronger and more active economy. To keep up with this growth, it’s essential to keep improving digital systems and support services.

FAQs

Read Our Article: Direct Taxes: Definition, Significance