Direct tax collection doubled in five years, 36% increase in the number of ITR filers

Direct tax collection in India has doubled over the past five years. The primary cause of this is the growth in the economy of the country, better tax compliance and application of digital technology. The base of income tax return (ITR) filers has grown by 36 per cent in the past five years. Though 6.72 crore ITRs were submitted in the financial year 2020-21, now the figure has risen to around 9.19 crores in 2024-25. This data was provided in the Ministry of Finance statistics.

According to the data of the Ministry of Finance, the total gross direct tax collection in 2020-21 was Rs 12.31 lakh crore. It increased to Rs 16.34 lakh crore in 2021-22. After this it reached Rs 19.72 lakh crore in 2022-23 and Rs 23.38 lakh crore in 2023-24. In 2024-25, it increased to Rs 27.02 lakh crore. This increase is the result of economic reforms and better tax collection system. The government has taken several digital steps to increase the tax base.

Technological changes have been made in the tax system in the country over time. PAN number was introduced in 1995, which made it easier to identify taxpayers and expanded the tax base. The Centralized Processing Center (CPC) was started in 2009 and the TRACES system in 2012, which helped in correcting errors in ITR process, refund issuance and TDS. The process of linking PAN with Aadhaar started in 2017, so that fake identification and duplication could be prevented.

A new tax payment system called TIN 2.0 was introduced, which provides real-time tax credit, multiple payment options and faster refunds. This has provided more convenience to taxpayers. A 'Demand Facilitation Center' was set up in Mysore, where complete information about the outstanding tax is available at one place, which facilitates both the taxpayer and the departmental officer.

Over the past decade, the Income Tax Department has introduced 'Project Insight', which builds a 360-degree picture of all taxpayers through data analytics. This has aided in improving tax compliance and increasing the tax base. The 'Faceless Assessment Scheme' introduced in 2019 eliminated the physical interface between the tax officer and the taxpayer. This process ensures greater transparency, efficiency and accountability.