In a first in recent history of tax filings, income tax e-filings in FY2019 have dropped by more than 6.6 lakh, a trend that analysts said was surprising as tax base was expected to increase post demonetisation.
According to statistics put out on Income Tax Department’s e-filing website, income tax e-filings in FY 2018-19 was 6.68 crore, down from 6.74 crore in the previous fiscal.
E-filers in FY 2016-17 were 5.28 crore.
Kotak Economic Research in an April 30 report said: “We are surprised with the decline in income tax e-filing in FY2019.”
“If the filings are indeed plateauing, it will be a worry for the fiscal which has seemingly shifted its focus to compensatory expenditure,” it said. “Tax filings have surprisingly plateaued in FY2019. This is surprising given that post demonetisation it was expected that the tax base would continue to increase.”
However, registered filers have been on the rise – they grew by 15 per cent to 8.45 crore as on March 31, 2019, the e-filing website showed.
Registered filers were just 2.7 crore at the end of March 2013 which almost doubled to 5.2 crore in March 2016 and to 6.2 crore in March 2017.
In signs of lower compliance, the ratio of actual filings to registered filers was 79 per cent in FY2018-19, down from 91.6 per cent in the previous fiscal. The compliance ratio was 85 per cent and 83 per cent in the preceding two years. It was 79.3 per cent in FY2014-15, which was a decline from 82 per cent of FY2013-14.
The data showed a steady rise in filers in the Rs 5 lakh to Rs 10 lakh range with 1.05 crore filings in FY2018-19 including 1.02 crore of individual taxpayers.
Kotak said the declining e-filings “does beg the question whether compliance was weaker in the latter part of FY2019 given that the number of registered filers has continued to see steady growth.”
“If compliance has been weak, the new government will aim at increasing the filings and collections in FY2020,” it said. “A focused utilization of the data on deposits during demonetization could yield better compliance, especially in the higher income brackets.”