Trends in Income Tax returns for 2022-23: Which states and income categories filed the most returns?

In the returns filed during the current financial year until June 30, the number of individuals disclosing income over Rs 1 crore stood at 7,814, while those in the income group of up to Rs 5 lakh were slightly more than 1 crore.

The numbers are expected to be revised upwards sharply as the income-tax department is yet to release the detailed break-up of the returns filed until July 31, which was the deadline for filing ITRs for individuals and those who do not require audit.

As per the tax department, 6.77 crore returns were filed until July 31, and the number had gone up to 6.81 crore as on August 6.

To be sure, income-tax filings could reflect multiple returns filed by the same individual. Also, in a financial year, ITRs can be filed for incomes earned in more than one previous assessment year (AY). The income-tax department used to earlier release annual tax filing data for direct taxes as per the assessment year, but it has not done so after AY 2018-19.

At the top and bottom

Over the last two financial years, ITR filings have seen a substantial increase in the income range of over Rs 1 crore. For income over Rs 1 crore, 1,69,890 individuals filed returns during FY2022-23 marking a year-on-year rise of 48.4%, while in FY2021-22, 1,14,446 individuals filed returns for the same income range, up 40.2% year-on-year.

In the income range up to Rs 5 lakh, 4.65 crore individuals filed returns during FY2022-23, an increase of 4.9% over the 4.43 crore returns filed in the same income range during the previous financial year. In the returns filed during 2021-22, however, individuals disclosing income till Rs 5 lakh had declined in number by 16.5%.

In total, including company, firm, Hindu Undivided Family and association of persons, more than 2.69 lakh ITRs were filed for income above Rs 1 crore in FY2022-23, while 4.97 crore returns were filed for income up to Rs 5 lakh.

Post-pandemic trends

Compared with 2019-20, the pre-pandemic year, the number of total ITRs filed during 2022-23 rose by 41.5% for filers with income above Rs 1 crore, whereas those in the income bracket of up to Rs 5 lakh registered an increase of just 0.6%. For individuals specifically, the highest rate of increase (53.7%) was seen in the income range of Rs 20,00,001-50,00,000, followed by those in the income group of above Rs 1 crore (51.8%). Those in the income range of up to Rs 5 lakh grew just 0.3%.

The impact of the pandemic was also visible in a significant pattern in the ITRs filed — except for the income category of up to Rs 5 lakh, all other income groups saw a decline in the number of returns filed during 2020-21. Returns filed by individuals during 2020-21 for income up to Rs 5 lakh increased by 14.6% to 5.31 crore from 4.63 crore in the previous financial year.

However, other income groups saw a decrease in returns filed during 2020-21 — for income above Rs 1 crore the number of ITRs filed by individuals dropped sharply by 27.1% to 81,653 from 1.12 lakh in the previous financial year. For income between Rs 50 lakh and Rs 1 crore, ITRs filed by individuals fell by 20.8% to 1.82 lakh in 2020-21 from 2.30 lakh in the previous fiscal; for income between Rs 5 lakh and Rs 10 lakh, the number of individuals decreased by 5.1% to 96.92 lakh in 2020-21 from 1.02 crore.

The trend has reversed since, especially with ITRs filed in the higher income categories seeing an increase in 2021-22 and 2022-23. Total ITRs filed for income above Rs 1 crore increased to 2.69 lakh in FY2022-23 from 1.93 lakh in 2021-22 and 1.46 lakh in 2020-21.

Trends in different states

Maharashtra has continued to top the list of states/ Union Territories with the highest returns filings over the last four years. In FY2022-23, 1.19 crore returns were filed in Maharashtra as against 1.11 crore in the previous financial year. Uttar Pradesh followed, with 75.72 lakh returns filed during FY2022-23.

Then came Gujarat (75.62 lakh), Rajasthan (50.88 lakh), West Bengal (47.93 lakh), Tamil Nadu (47.91 lakh), and Karnataka (42.82 lakh).

During the current financial year, data for which is available only until June 30, Maharashtra has seen returns filings of 18.52 lakh, followed by Gujarat (14.02 lakh) and UP (11.92 lakh). These states are followed by Punjab, which has also entered the top five, with returns filings of 9.24 lakh so far. In the return filings in the last financial year, Punjab had ranked number 10, with 38.41 lakh filings.