Increase in Income Tax Return Filers: The government has long believed that increasing tax exemptions would discourage people from filing returns. It was expected that in view of the lack of tax, the number of people filing returns would reduce. But, the result was completely opposite. In the last three years, the number of taxpayers with income of Rs 5-10 lakh has almost tripled.

In the financial year 2023-24, only 16.39% people in this category filed returns. This figure will increase to 37% in 2024-25, and this share will increase to 46% in 2025-26. This means that the greater the leeway, the deeper the trust in the system.

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Tax-free up to Rs 12.75 lakh: What exactly changed?

In the new tax system, there is no tax on income up to Rs 12 lakh. If we add the standard deduction of Rs 75,000 for salaried people, then income up to Rs 12.75 lakh is completely tax-free.

That is why people are now telling their real income directly instead of hiding it. There is no fear of paying taxes, but trust in transparency has increased.

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The fear of notice has reduced…people are coming back into the system.

Chandrashekhar Chitale, former chairman of the Direct Tax Committee of ICAI, says that earlier there was concern about the notices received for hiding income. Now by increasing the limit, taxpayers have got a clear message that the government wants to provide them relief. As a result, people are filing returns without any tension.

Now there is no compulsion to hide income

The biggest change for small businesses and self-employed people is that when almost all of their income can be tax-free, there is no point in hiding it. Mental relief has also increased. Honesty has never been so easy.

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Digital tracking has completely changed the game

Systems like UPI, GST, and AIS have made transactions completely transparent. Now, the tax department has more and accurate data than ever before. That is why people feel confident in following the rules.

Increased exemption opens the way for improvement in old returns

Many people who previously underreported income are now taking advantage of the new exemption regime to correct their returns. With this step, the number of people filing has also increased rapidly.

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Growth in real income is also a big factor

There has been a significant increase in income across the country due to the increase in gig work, startups, formal employment and small businesses. As income increases, the tax base automatically increases.

Tax collection of Rs 25 lakh crore, the biggest target in history

In the last five years, the government has given a total of ₹13.23 lakh crore tax exemption to individual taxpayers, companies and private sector financial institutions. Despite this, there has been no decline in tax collection. For the first time this year, the tax collection target has been set at Rs 25.2 lakh crore, which is 13.36% more than last year.

More than 100 million people can file returns this year

Between 2022-23 and 2023-24, the number of return filers increased by 13.9 million. This number may cross 100 million in 2025-26. As of October 31, more than 80 million people had filed returns, this figure does not include corporate and audited returns.

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