ITR filings reach record high, indicating expanding tax base

The Income Tax Department has announced a remarkable milestone in the field of tax compliance, with a record-breaking number of income tax returns (ITRs) filed for the assessment year 2023-24. The figures show an impressive upswing of 16% compared to the preceding year, reaching an astounding 67.7 million ITRs filed. This substantial increase is indicative of a widening tax base, a key factor in revenue generation for the government.

First-time filers drive the surge

A noteworthy aspect of this surge is the significant contribution made by first-time filers. A staggering 5.37 million individuals filed their ITRs for the first time, reflecting the growing awareness and participation in the tax compliance process. This influx of new taxpayers not only bolsters the government's revenue collection efforts but also underscores the increasing financial literacy and responsibility among citizens.

Peak filings on the last day

The climax of this remarkable surge was observed on the final day of filing, July 31st. On this pivotal day, the Income Tax Department witnessed an extraordinary wave of submissions, with over 6.43 million ITRs filed on that single day. This remarkable feat highlights both the efficiency of the filing process and the willingness of taxpayers to fulfill their obligations promptly.

Digitalization and targeted campaigns yield results

The Income Tax Department attributes a significant portion of this success to its comprehensive digitalization efforts and targeted outreach campaigns. Through social media, email, and SMS campaigns, taxpayers were encouraged to file their ITRs ahead of time. These endeavours bore fruit, as the filing for AY 2023-24 occurred relatively earlier than in previous years, showcasing the positive impact of strategic communication and technological facilitation.

ITR categories and e-verification trends

Among the filed ITRs for AY 2023-24, the department revealed the following distribution: ITR-1 (49.18%), ITR-2 (11.97%), ITR-3 (11.13%), ITR-4 (26.77%), and ITR-5 to 7 (0.94%). Remarkably, more than 46% of these returns were submitted using the online ITR utility accessible through the e-filing portal, emphasizing the increasing shift towards digital modes of filing.

E-verification, Aadhaar OTP, and timely processing

The Income Tax Department underlines the significance of e-verification for the seamless processing of ITRs and the issuance of refunds. Among the 56.3 million e-verified ITRs, an overwhelming 52.7 million utilized Aadhaar-based OTPs, constituting a remarkable 94%. Furthermore, over 34.4 million ITRs for AY 2023-24 were processed by July 31st, indicating the efficiency of the system in ensuring timely outcomes.

Penalties and extended deadlines

For individuals with a net taxable income exceeding ₹5 lakh per annum, the deadline for filing ITRs for the assessment year 2023-24 or fiscal 2022-23 is December 31, 2023. However, a penalty of ₹5,000 applies. Conversely, those with incomes below ₹5 lakh per annum have the option to file ITRs until the year-end, with a penalty cost of ₹1,000.

The surge in ITR filings for the assessment year 2023-24 reflects a positive trajectory in tax compliance, driven by a combination of digitalization, targeted campaigns, and increased financial awareness among citizens. The Income Tax Department's emphasis on e-verification methods and timely processing further enhances the overall effectiveness of the tax collection process.