Taxpayer base more than doubled in the last decade, Pg9

Key Highlights:

• India's taxpayer base more than doubled from 5.26 crore in Assessment Year (AY) 2013-14 to 12.13 crore in AY 2024-25.
• Individual taxpayers increased from 4.96 crore in AY 2013-14 to 11.61 crore in AY 2024-25, with a Compound Annual Growth Rate (CAGR) of approximately 8%.
• Non-individual taxpayers rose from 0.29 crore in AY 2013-14 to nearly 0.48 crore in AY 2024-25, with a CAGR of about 5%.
• The cost of collecting direct taxes decreased from 1.36% in Fiscal Year (FY) 2000-01 to 0.41% in FY 2024-25.

Detailed Insights:

• The expansion of the taxpayer base indicates deeper formal participation in the economy rather than a temporary surge in compliance.
• Individual taxpayers experienced a contraction in AY 2020-21 due to the COVID-19 pandemic, followed by a strong recovery with double-digit growth in subsequent years.
• Non-individual taxpayers showed more stable growth, with a slowdown in AY 2020-21 and a measured rebound, suggesting steady formalization across business entities.
• The decline in the cost of collecting direct taxes is attributed to the adoption of digital filing systems, pre-filled returns, faceless assessments, and expanded third-party information reporting.
• The structural strengthening of India’s direct tax system enhances revenue resilience, equity, and long-term fiscal planning nationwide.

Key Concepts Involved:

• Assessment Year (AY): A 12-month period from April 1 to March 31 of the following year, used for calculating income tax.
• Compound Annual Growth Rate (CAGR): The year-over-year growth rate of an investment over a specified period of time, expressed on an annual basis.
• Direct Tax: Taxes levied directly on income and wealth, such as income tax and corporate tax.