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New Delhi: The demonetisation gain of more people filing income tax returns seems to have been short-lived. Data from the Income Tax Department shows that the total number of e-returns filed have contracted for the first time in years.

The number of e-returns filed in 2018-19 contracted marginally, by 1 per cent, data available with the IT department showed. However, analysts said this was significant because 99 per cent of tax returns were filed online in 2017-18, and this could indicate a contraction in the total number of returns filed by taxpayers too.

The number of tax returns filed in 2017-18 had surged after the Narendra Modi government invalidated the old Rs 500 and Rs 1000 notes on 8 November 2016, forcing people to deposit the notes in banks within a month and a half. The tax department had used this cash deposit data to improve taxpayer compliance and go after tax evaders.

The number of e-returns filed has grown exponentially in the last 10 years | Soham Sen | ThePrint

Also read: Demonetisation was not at all a disaster, led to greater tax compliance: Sanjeev Sanyal


Small traders impacted

IT department data shows that 6.68 crore tax returns were filed online in 2018-19, as against 6.74 crore in 2017-18. The total number of tax returns filed online and offline in 2017-18 was around 6.84 crore, as against 5.43 crore in 2016-17.

“In the year after demonetisation, people were forced to file their tax returns as they made cash deposits in their accounts and had to declare their source of income and file their returns. They have no such compulsion in 2018-19,” said B.M. Singh, former chairman of the Central Board of Direct Taxes.

“The fall in the tax returns filed in 2018-19 also shows the impact of demonetisation on small businesses, and the rollout of GST from July 2017. Both these measures have impacted incomes of small traders and businesses, and they are no longer filing their tax returns,” he said.

The fall in the number of taxpayers is also despite the fact that delayed and non-filing of IT returns attracts a penalty from 2018-19. A penalty of Rs 5,000 is levied if the return is filed after the due date but before 31 December. The penalty levied is Rs 10,000 after 31 December. However, if the taxpayer’s income is less than Rs 5 lakh, the penalty is capped at Rs 1,000.

The decrease in compliance is not good news for the government, and comes at a time the income tax department has failed to meet its revised income tax collection target of Rs 12 lakh crore for 2018-19.

IT Department’s response

Responding to questions from ThePrint, an official of the Income Tax Department who did not wish to be identified said: “The data for 2017-18 also includes revised returns for the previous years, whereas for 2018-19, it only includes one year’s revised returns data in 2018-19.

“If we just look at tax returns filed for assessment year 2017-18 and 2018-19, then there is a 19 per cent growth.”


Also read: Income Tax refunds being held back so that stiff collection targets are met, allege CAs


This report has been updated with the Income Tax Department official’s response.

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14 Comments Share Your Views

14 COMMENTS

  1. The news and the headlines are very misleading. Actually media people require masala only. They have their own axe to grind. By giving such healines they think that they would get good TRP . This type of journalism is very much harmful to make an opinion in the minds of general public. I was myself was mislead but after going through the whole article I could know the facts and the news article was found to be confusing. The only target was to publish the article nothing else.

  2. I can’t believe how incompetent the article writer is. The last line of this article invalidates everything else said before. Why even draw conclusions before the anti-climax? There is a 19% increase period.

  3. It will decrease further because
    Up to five laks the filling of return it will be upto asseccee that return to be filled or not.
    Due to heavy fine people u/s 234f is a reason for such decrease

  4. The print wire and Hindu hired jounaralist by opponent. You saying that return dropped from 6.74 to 6.68 a mere drop of .06 lakh what a big deal in it but not said that it jumped more than 20 % after demonetisation . Making scandalous headlines because most don’t go in detail. Most of you playing dirty games because this govt had not pampered so called jounaralist

  5. So, you have not changed the headline or the contents even after the reply explaining the reason and that the original returns have increased by 19 percent. Very good journalism.

  6. In India indirect taxes are more than direct taxes when I asked the reason to ITO he said because in India 60% people do agriculture farming work & agricultural income is tax free so 60% people never file for ITR & 30% are poor people so only 10% people file for ITR.

  7. Wrong and misleading headline!

    If we just look at tax returns filed for assessment year 2017-18 and 2018-19, then there is a 19 per cent growth.

  8. What’s there even if the number of IT returns filed is decreased by another 20%. Increase or decrease in the collection of tax that matters most.

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