Individuals with different streams of income, including rent from multiple properties, capital profits from shares or assets, or have foreign income or assets, but are not entrepreneurs or experts, are the fastest growing tribe of income taxpayers, suggesting a changing tax base in India.
The latest data from the Ministry of Income tax shows that after the pandemic, their share in the total tax return submitted per year doubled to 14% in the year of FY25 evaluation. In each evaluating year since FY21, this class remained the fastest growing set of tax returns that showed their deeper participation in investment activities.
In absolute statement, number of income tax returns 2 (ITR-2) -Formal used to report individuals of individuals that is more than £50 Laky, which includes capital profits or rent from more than one house or foreign income – jumped out of 4.75 million from the year of FY21 to 12.17 million in the year of the FY25 evaluation, showed data from the ministry.
ITR-2 UPSURGE
In the year of the FY22 evaluation ITR-2 increased by more than 27%and showed income gained in FY21. In the evaluation year, the income gained in the previous year will report and any waiting tax is paid. In the year of the FY23 evaluation, ITR-2 submissions jumped by more than 30% of the previous period. The following year the evaluation was about 14%.
Meanwhile the number of tax returns filed with individuals with a salary income to £50 Lakh, but without any of these additional income flows of the ITR-2 fillers rose from 31.65 million in the year of FY21 to 35.97 million in FY25, but their share in total revenues was reduced from approximately 49% to approximately 43%.
Vast report
This trend comes as a result of the extensive use of the reporting of third -party financial transactions in the economy and expanding the use of taxes deducted from the source of economic activity and the opportunities provided to the evaluators to report their income on the basis of transactions in the tax department radar. Also, the strong participation of retail assets of households in households, which contributed to the increase in ITR-2, can be seen.
“The steady increase in ITR-2 indicates a significant shift in the income and investment profile of Indian taxpayers,” said Son Iyer, partner and national leader, People Advisory Services, tax in EY India.
It reflects not only higher individual earnings, but also deeper retail participation in the capital markets and other investment routes, Iyer said. “Increased monitoring of compliance with regulations and increased transparency of financial transactions has also contributed to this trend, which allowed the tax department to expand the tax base and improve the news discipline,” Iyer explained.
Landscape shift
The sharp increase in ITR-2 signals significant transformation in the India tax environment and it is a strong indicator that more individuals are now actively involved in capital markets, as shown in the increase in the opening of new DemAT accounts, said AMIT Maleshware, AKM Global tax partner, tax and consulting firm.
At the end of December 2024, India had 185 million Demat accounts, which is 33% more than in the previous period, the economic survey emphasized 2024-25.
“It compares to the trend that can be seen by Post-Pandemic, where the participation of a retail investor in shares, mutual funds and real estate has increased significantly. However, this trend is not only a reflection of increased participation in investment activities such as shares, mutual funds, assets and foreign assets, but also successful expansion.” Maheshwari.
Report
Maheshwari said that the adoption of technologically controlled automated reporting of income tax -based transactions was played, stated with reference to the collection of information from third parties such as banks, credit cards and real estate registrations) and a summary of the tax authority).
“These platforms are now automatically capturing and showing a wide range of financial transactions, including lottery winnings, virtual digital assets and online games. As a result, they are individuals who may not have received such income before
This development points to the ecosystem of maturation, where both increased financial sophistication between individuals and the robust mechanism of digital news, according to authorities, lead to greater transparency and inclusion to India’s tax network, Maheshware added.
(Tagstotranslate) a variety of income sources
