The number of people filing income tax returns will increase by 85.3 per cent to 482 million by FY2047, which will take the nation into the coveted league of middle-income economies, SBI Research said on India’s Independence Day on August 15, 2023.
An SBI report predicts a surge in the average income of the Indian middle-class population, and the number of people filing income tax returns will increase by 85.3 per cent by FY2047.
The number of people filing income tax returns will increase by 85.3 per cent to 482 million by FY2047, which will take the nation into the coveted league of middle-income economies, SBI Research said on India’s Independence Day on August 15, 2023.
In AY2011-12, a total of 16 million people filed ITR, with 84 per cent belonging to the Rs 5 lakh income group. Fast-forward to AY23, 68.5 million people filed ITRs, with the number of people in the Rs 5 lakh income group decreasing to 64 per cent. The SBI report shows that 13.6 per cent of the population has successfully moved out of the lower-income strata.
Further, the per capita income, which is the income earned by an Indian per year, is projected to surge from Rs 2 lakh in FY23 to Rs 14.9 lakh by FY47. Over the past nine years, the weighted mean income jumped from Rs 4.4 lakh (AY14) to Rs 13 lakh (AY23). This surge is driven by transitioning from lower to upper-income groups and more tax filers reporting income, the report says. Due to the same reasons, the study projects the mean income to hit Rs 49.7 lakh by 2047.
Maharashtra, Uttar Pradesh, Gujarat, Rajasthan, and West Bengal emerged as the top five states for tax filing in AY23, constituting nearly 48 per cent of total returns. Overall, there have been 64 lakhs more ITRs filed in AY23 over AY22, with the maximum increase in Maharashtra.
The report recommends better capturing of inter-state migration in ITR returns to facilitate improved policy narratives. Alongside this, India’s workforce is projected to expand from 530 million in FY23 to 725 million in FY47, accounting for 45 per cent of the population.
Discipline In ITR Filing & Processing
The increasing discipline in ITR filing is evident, says the report, with an estimated 85 million returns expected by AY24. The proportion of returns filed after the due date has notably decreased from 60 per cent in AY20 to just 25 per cent in AY23. The report attributes this shift to simplified forms and user-friendly digital processes instituted by the Central Board of Direct Taxes (CBDT).
Furthermore, the report says that 42 per cent of taxpayers filed ITR-1, mainly people with incomes up to Rs 50 lakh, including salary, pension, and one-house property. The percentage of zero tax liability filers saw a substantial decline, from 84.1 per cent in AY12 to 64 per cent in AY23.
Further, more tax returns are being promptly processed by the I-T Department. In AY 2022, only around half were processed on time, but in AY 24, 64 per cent of filed returns were processed by the due date. Also, returns processed (43 million) as a percentage of verified returns (60 million) are also at a high level of 72 per cent in AY24, the report says.