Income Tax returns filed for 2017-18 rose 24.7 per cent year-on-year to 2.83 crore returns as on August 5, as against 2.27 crore returns filed during the corresponding period last year. The number of I-T returns filed by individuals, accounting for 98.7 per cent of total ITR, jumped 25.3 per cent from last year to 2.79 crore returns filed up to August 5, as against 2.23 crore returns in the corresponding period last year.
According to data released by the Ministry of Finance, a sharp rise of 41.79 per cent was witnessed in the advance tax collections of personal income tax for the first four months of this financial year over the corresponding period last year.
The surge in filing of income tax returns (ITR) follows the government’s efforts to crack down on tax evasion in the wake of demonetisation last November. The tax department, in a statement, said that the rise in ITR filings also reflects addition of a “substantial” number of new taxpayers. The tax department had extended the date for income tax returns filing till August 5 from the earlier deadline of July 31.
“As a result of demonetisation and Operation Clean Money, there is a substantial increase in the number of income tax returns filed. The number of returns filed as on 05.08.2017 stands at 2,82,92,955 as against 2,26,97,843 filed during the corresponding period of FY 2016-2017, registering an increase of 24.7 per cent compared to growth rate of 9.9 per cent in the previous year.”
“The growth in returns filed by individuals is 25.3 per cent with 2,79,39,083 returns having been received up to 05.08.2017 as against 2,22,92,864 returns in the corresponding period of FY 2016-2017. This clearly shows that substantial number of new taxpayers have been brought into the tax net subsequent to demonetisation,” the statement said.
Tax experts said the increase in income tax returns filings reflects increased compliance by taxpayers in the backdrop of inquiries made by the tax department after demonetisation and the trend is likely to continue going ahead owing to digitised trail of transactions under the new indirect tax regime of Goods and Services Tax (GST).
“The increase in number of income tax returns reflects increased compliance level, addition of new taxpayers and result of inquiries made by the tax department after demonetisation. The trend is expected to continue as the tax department is keeping a 360-degree watch on transactions, which will encourage people to be more compliant,” Rahul Garg, Partner and Leader, Direct Tax, PwC said.
“Also, transactions under the GST will be recorded, which in turn is expected to further increase tax compliance,” Garg said.
Personal income tax under self assessment tax grew 34.25 per cent over the corresponding period in 2016-2017. “The effect of demonetisation is also clearly visible in the growth in direct tax collections… the (tax collection) figures amply demonstrate the positive results of the government’s commitment to fight the menace of black money. CBDT is committed in its resolve to eradicate tax evasion in a non-intrusive manner and widening of tax base,” the official statement said.
On August 1, Minister of State for Finance Santosh Kumar Gangwar, while replying to a question in Rajya Sabha, had said that the number of income taxpayers increased after demonetisation. “During the period of November 9, 2016 to March 31, 2017, 1.96 crore returns were filed as compared to 1.63 crore returns filed during corresponding period of FY 2015-16 and 1.23 crore returns filed during corresponding period of FY 2014-15.”
Last month, using the information received through Statement of Financial Transactions from banks and financial institutions in the second phase of ‘Operation Clean Money’, the Income Tax department had identified 5.56 lakh individuals whose tax profiles were inconsistent with the cash deposits made by them after demonetisation. Another 1.04 lakh persons, who did not disclose all bank accounts during e-verification in the first phase of Operation Clean Money, were also identified by the tax department.
In the first phase of Operation Clean Money launched on January 31 this year, the tax department had sent communications to around 18 lakh individuals asking them to respond online to specific queries relating to cash deposits made during November 9-December 30, the time period given for deposit of scrapped currency notes in banks.
Of the 17.92 lakh persons to whom the queries were sent by the tax department under the first phase of Operation Clean Money, 9.72 lakh persons had responded to the department as per pre-defined parameters of sources of the cash deposits.
At the time of launch of the second phase of Operation Clean Money, the I-T department had said it will investigate over 60,000 individuals, including 1,300 high risk cases. The high risk categories identified included businesses claiming cash sales as the source of cash deposits which were found to be excessive compared to their past profile or industry norms, large cash deposits made by government or PSU employees, persons who had undertaken high value purchases, persons who had used shell entities for layering of funds and where no responses were received.
The government had taken extensive enforcement action including search and seizure and surveys largely based on the information received during the demonetisation period.
In April, the Central Board of Direct Taxes (CBDT), the policy-making body of the Income Tax department, had said that more than 2,362 searches, seizures and surveys were conducted by the I-T department November 9, 2016 to February 28, 2017, leading to seizure of valuables worth more than Rs 818 crore, which included cash of Rs 622 crore, and detection of undisclosed income of more than Rs 9,334 crore. More than 400 cases were referred by the department to the Enforcement Directorate and CBI.