The e-filing of income tax returns figures during the fiscal 2018-19 over 2017-18 have drawn public attention in the last two days. There are conflicting reports with respect to the status of total number of income tax e-filings. The debate began after Kotak Economic Research flagged a one percent drop in income tax e-filing for FY19 and said the research house is “surprised” with the decline.
Kotak researchers, in the 30 April report, cited the income tax e-filings figures on the department website which showed a decline in FY 2018-19 to 6.68 crore from 6.74 crore in the previous fiscal (2017-18).
"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, adding, 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.
This report and the subsequent media coverage gained instant attention on the social media in the election season because it was after a long gap, the annual e-tax filing figures logged a fall. This shouldn’t have happened, especially after demonetisation, which, the government claimed, supposedly instilled fear of God in taxpayers and boosted the overall tax collection since then — something which is still a disputed claim.
The next day, Income-Tax Department (I-T Department) issued a clarification, rubbished the media reports of drop in e-filings of tax returns as factually incorrect and said there is an actual jump of 19 percent in the number of income tax returns(ITRs) e-filed during FY 2018-19 compared with FY 2017-18.
Jump of 19% in the number of Income Tax Returns(ITRs) e-filed during FY 2018-19 compared to FY 2017-18! Substantially larger no of taxpayers filed their ITRs electronically in FY 2018-19 compared to FY 2017-18. Media reports of reduction in efiling numbers factually incorrect.
— Income Tax India (@IncomeTaxIndia) May 6, 2019
So what is correct here? The answer depends on what data you are looking at on the I-T Department website. If you look at the total count of the income tax e-flings on the site, the total filing count for 2018-19 stands at 6,68,09,129 till March 2019. The corresponding figure in the previous financial year, i.e, 2017-18 was 6,74,4,904, which means a drop of 1 percent over year.
This was mainly because a drastic fall across several categories such as ITR-2, ITR-2A, ITR-3, ITR-4S and ITR-4. For instance, the ITR count of ITR-2 fell from 3,76,948 to 43,752. But the catch here is that these include filings of previous fiscal, 2016-17 as well.
If one looks at the assessment year (AY) filing count for 2017-18 and 2018-19, then the I-T Department’s claim of 19 percent year-on-yer growth proves to be correct. That is if one excludes the previous years’ figures and takes only the standalone figures for these years. For AY 2018-19, a total of 6,49,39,586 tax filings were recorded as against 5,47,30,304 in AY 2017-18. This is a jump of 18.65 percent over the year. This is supported by a broad-based growth across categories.
But, note that these AY figures are given only for FY18 and FY19, not for the years before that. It is not possible to ascertain, at least from the I-T Department site, also what has happened since demonetisation or, let’s say, in the past five years of Narendra Modi government’s rule. The problem is that the I-T Department website doesn’t give backdata for AY filing growth figures prior to FY18. This makes the study of the long-term trend difficult.
As of now, over 2018-19, the I-T Department stands correct on the claim of 19 percent jump in FY19 if one looks at the AY figures and those who advocate the theory that there is an actual drop in that year too stand correct if one looks at the total filing count that includes the previous years’ filings. So, what is the correct way of looking at the e-filing of tax count? Well, it is a matter of debate.
(Data contribution by Kishor Kadam)
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Updated Date: May 07, 2019 14:46:13 IST