As per CBDT, a taxpayer is a person who either has filed a return of income for the relevant assessment year (AY) or in whose case tax has been deducted at source in the relevant financial year but the taxpayer has not filed the return of income.
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Direct tax-to-GDP ratio, which reflects the share of taxes in the overall output generated in the country, rose to a 15-year high of 6.11 per cent in the financial year 2022-23, time-series data released by the Central Board of Direct Taxes (CBDT) under the Ministry of Finance showed Tuesday. This was accompanied by an increase in the income tax return filers in India to 7.4 crore in FY23, up 6.3 per cent from FY22, even as the tax buoyancy — the growth rate of taxes in relation to the economy’s nominal growth rate — declined to 1.18 in 2022-23 from 2.52 in 2021-22 and 1.29 in the pre-Covid year of 2018-19.
The cost of tax collection — indicating the expenditure on tax collection as a proportion of the total tax collections — inched lower to 0.51 per cent in FY23, the lowest level since 2000-01, but it increased in absolute terms to Rs 8,452 crore, the highest level since 2000-01, the year for which data is last available, the CBDT data showed.
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Tax buoyancy had stood at (-)1.21 in 2019-20 and it was not computed for the financial year 2020-21 as both the nominal GDP and tax collections contracted from the previous year. Tax buoyancy had improved to 2.52 in 2021-22 due to a low base effect. Now, tax buoyancy inched lower to 1.18 in 2022-23 even as the growth rate for taxes was recorded at 17.79 per cent in 2022-23, higher than 15.11 per cent nominal GDP growth.
A tax buoyancy greater than 1 reflects a faster growth in taxes as against the country’s national income.
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Net direct tax collections, which reflect collections after refunds, “increased by 160.52 per cent to Rs 16.63 lakh crore in FY 2022-23 from Rs 6.39 lakh crore in FY 2013-14”, CBDT said in a statement. Gross direct tax collections stood at Rs 19.7 lakh crore in FY 2022-23, a rise of 173.3 per cent from Rs 7.21 lakh crore in FY 2013-14, it said. On a year-on-year basis, net direct tax collections increased by 17.8 per cent, while gross direct tax collections rose by 20.5 per cent.
While the number of persons filing income tax returns increased to 7.4 crore in financial year 2022-23, out of which 6.97 crore were individuals, the corresponding data for taxpayers was not available. In the previous financial year 2021-22, while tax return filers stood at 6.96 crore (with 6.55 crore individuals), overall taxpayers stood at 9.37 crore — a gap of 2.41 crore — showing that a significant number of taxpayers are getting taxed through measures such as TDS but are not filing income tax returns.
As per CBDT, a taxpayer is a person who either has filed a return of income for the relevant assessment year (AY) or in whose case tax has been deducted at source in the relevant financial year but the taxpayer has not filed the return of income.
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In the overall tax collections by the government, direct tax collections accounted for 54.62 per cent share in financial year 2022-23, a four-year high. Direct taxes as a share of the overall taxes had stood at 52.27 per cent in FY22, 46.84 per cent in FY21, 52.42 per cent in FY20 and 54.83 per cent in FY19. A higher direct taxes-to-indirect taxes ratio is considered progressive as indirect taxation hurts the poor more than direct taxes.
Among states and union territories, Maharashtra accounted for 36.4 per cent (Rs 6.05 lakh crore) of the overall direct tax collections in the country in the financial year 2022-23, followed by Delhi at 13.3 per cent (Rs 2.22 lakh crore), Karnataka at 12.5 per cent (Rs 2.08 lakh crore) and Tamil Nadu at 6.4 per cent (Rs 1.07 lakh crore). Cumulatively, these four states accounted for 68.6 per cent of the overall direct tax collections in FY23.
