The number of income tax filers in India has seen a dramatic rise over the past decade, more than doubling to 77.8 million (7.78 crore) in the financial year 2022-23 (FY23), according to data released by the Central Board of Direct Taxes (CBDT) on Tuesday. This represents a 104.91% increase compared to the 38 million (3.8 crore) income tax returns (ITRs) filed in 2013-14 (FY14), highlighting the significant expansion of India’s taxpayer base in recent years.
Surge in direct tax collections
In tandem with the increase in the number of tax filers, direct tax collections have also risen sharply over the last decade. Net direct tax collections grew by 160.52%, from ₹6.38 trillion (₹6,38,596 crore) in FY14 to ₹16.64 trillion (₹16,63,686 crore) in FY23. This surge reflects the government’s efforts to improve tax compliance and widen the tax base through reforms, digitalization, and enhanced enforcement.
For the current fiscal year, the government has set a target to collect ₹18.23 trillion in direct taxes, comprising both personal income tax and corporate tax. This represents a 9.75% increase over the ₹16.61 trillion collected in FY23, demonstrating the government’s continued focus on increasing direct tax revenues to fund its developmental and welfare programs.
Gross direct tax collections and direct tax-GDP ratio
The CBDT data also revealed a significant rise in gross direct tax collections, which increased by 173.31% over the past decade. Gross collections amounted to ₹19.72 trillion (₹19,72,248 crore) in FY23, compared to ₹7.22 trillion (₹7,21,604 crore) in FY14. This substantial increase reflects both economic growth and improved tax collection mechanisms.
Additionally, the direct tax-to-GDP ratio — an important indicator of how much of the country’s economic output is being contributed by direct taxes — rose from 5.62% in FY14 to 6.11% in FY23. This represents a 15-year high, indicating that direct tax collections are playing an increasingly prominent role in supporting India’s fiscal health and reducing dependence on indirect taxes like the Goods and Services Tax (GST).
More Read
Improved efficiency in tax collection
Another key highlight from the CBDT’s data is the improvement in the efficiency of tax collection. The cost of collecting direct taxes has declined from 0.57% of total collections in FY14 to 0.51% in FY23, marking the lowest level in over two decades. This reduction points to better use of technology and streamlined processes in the tax administration, enabling the government to collect taxes more efficiently while reducing administrative costs.
Expanding the tax base
The doubling of income tax filers over the past decade is seen as a major success in expanding the country’s tax base. Government initiatives such as e-filing, simplified return forms, and a crackdown on tax evasion have contributed to this rise. As more individuals and businesses come under the tax net, the government is better positioned to fund public services and infrastructure development.
The sharp increase in the number of income tax filers and the corresponding rise in direct tax collections reflect the effectiveness of the government’s tax reforms over the past decade. With the tax-to-GDP ratio at a 15-year high and improved efficiency in tax collection, India’s direct tax system is set to play an even more crucial role in financing the country’s development needs in the years to come.
