Income Tax Returns Filers Expected to Exceed 90 Million in AY25: SBI Report

Introduction

The latest report from the State Bank of India (SBI) anticipates a remarkable surge in the number of income tax return (ITR) filers, projecting that the total could exceed 90 million by the end of March 2025 for the assessment year 2024-25 (AY25). Alongside this projection, the report proposes a potential policy shift to a flat tax rate for specific income groups, particularly targeting senior citizens. Additionally, the report sheds light on an upward trend in female labor force participation across various states, indicating positive developments in both economic inclusivity and revenue growth for the nation. Let’s delve into the key points from the SBI report and explore what this could mean for India’s tax landscape.

Income Tax Filers in India: A New Record Expected for AY25

India’s income tax base has been steadily expanding, with more individuals joining the tax net each year. The SBI report projects that by the end of March 2025, over 90 million individuals could file their income tax returns for AY25. This projected rise aligns with the Indian government’s efforts to widen the tax base and increase compliance through digitalization and simplified processes.

This record-breaking growth in tax filers can be attributed to:

• Enhanced Compliance and Transparency: Government initiatives such as e-filing, direct tax portals, and advanced data analytics have streamlined tax filing, encouraging more individuals to comply.
• Rising Disposable Income: With the increase in per capita income and disposable income levels, more individuals are entering taxable income brackets.
• Public Awareness: Improved awareness and tax literacy among the public regarding the benefits of filing income tax returns have driven increased participation.

The sharp increase in tax filers represents a robust response to India’s evolving tax framework, benefiting from user-friendly systems and increased awareness among the population.

Proposed Flat Tax Rate for Seniors: A Potential Policy Change

One of the report’s noteworthy suggestions is the introduction of a flat tax rate for individuals earning over ₹8 lakh annually, with a focus on those aged between 60 and 80. This proposed measure aims to simplify the tax structure for senior citizens, ensuring that tax compliance does not impose an undue financial burden on them.

Key Benefits of a Flat Tax Rate for Senior Citizens

1. Simplified Tax Compliance: A flat tax rate would make filing simpler for seniors, many of whom may prefer straightforward taxation over complex calculations.
2. Economic Relief: This measure could reduce the tax burden on seniors, allowing them to manage their finances more comfortably during retirement.
3. Enhanced Financial Stability: With a predictable tax rate, seniors can better plan their retirement funds, leading to greater financial security.

If implemented, this policy shift could not only streamline the tax process but also act as a compassionate financial strategy for those in their golden years, balancing revenue collection with the well-being of senior citizens.

Rising Female Labor Force Participation: A Bright Spot in the Report

The SBI report also highlights an encouraging trend: female labor force participation is on the rise, with significant movement noted in states such as Jharkhand, Odisha, Uttarakhand, Bihar, and Gujarat. This upward trend reflects India’s progress toward creating a more inclusive workforce, a critical component of sustainable economic growth.

Factors Contributing to Increased Female Participation

• Government Initiatives and Policies: Programs aimed at skill development, economic independence, and gender equality have been key drivers.
• Shift in Social Norms: Changing societal norms have encouraged more women to pursue careers, especially in traditionally conservative states.
• Rural and Urban Employment Opportunities: Growth in employment across diverse sectors has opened new job opportunities for women, especially in states experiencing rapid economic growth.

The rise in female labor force participation is likely to have positive implications for India’s tax revenue and economic resilience. With more women joining the workforce, household incomes increase, leading to a larger taxable base and a broader impact on the national economy.

Economic Implications of Expanding Tax Base and Gender Diversity

The combined trends of an expanding tax base and a growing number of working women highlight India’s gradual shift toward a more inclusive and comprehensive tax ecosystem. Key economic benefits include:

1. Increased Revenue for Developmental Expenditure: An expanded tax base creates additional revenue, enabling the government to allocate funds for infrastructure, education, and healthcare.
2. Higher Disposable Income Leading to Greater Consumption: With more people, especially women, entering the workforce, household spending is likely to increase, boosting demand across various sectors.
3. Balanced Economic Growth: Increased female participation contributes to a more balanced workforce, fostering diversity in perspectives and economic resilience.

Looking Ahead: What the Future Holds for India’s Tax Landscape

As India anticipates a record 90 million income tax filers in AY25, the proposed flat tax rate for senior citizens and the rise in female labor force participation could be game-changers in the country’s economic journey. Simplifying tax structures for seniors aligns with the government’s commitment to creating an inclusive tax policy that respects the unique needs of every age group, while the increase in women’s participation in the workforce adds to the robustness of India’s economic framework.

As we move forward, policies that focus on inclusivity, simplicity, and economic growth could pave the way for a more balanced and resilient economy. Tax reforms, coupled with empowerment initiatives, will likely continue to shape the nation’s tax landscape in the years to come.

FAQs

1. Why is the number of income tax filers expected to exceed 90 million in AY25?
The increase is attributed to enhanced compliance, streamlined tax processes, rising incomes, and greater tax awareness among the population.

2. What is the proposed flat tax rate for senior citizens?
The SBI report suggests a flat tax rate for individuals aged between 60 and 80, who earn above ₹8 lakh annually. This measure aims to simplify tax compliance and reduce financial burdens for senior citizens.

3. Which states have seen an increase in female labor force participation?
The report highlights Jharkhand, Odisha, Uttarakhand, Bihar, and Gujarat as states with the most significant increases in female labor force participation.

4. How does rising female labor force participation benefit India’s economy?
Increased participation of women in the workforce leads to higher household incomes, greater consumption, and a larger tax base, contributing to balanced economic growth.

5. How will these trends impact India’s tax landscape?
A growing tax base and a diverse workforce can strengthen India’s economy, fostering sustainable growth and ensuring a resilient tax system.

Conclusion

The SBI report’s findings underscore significant milestones in India’s tax and employment landscape. With the number of income tax filers set to cross 90 million and a growing female workforce, India’s tax ecosystem is not only expanding but also evolving to become more inclusive. The proposed flat tax rate for seniors is an example of the government’s responsiveness to the needs of different demographic groups, while the increase in female labor force participation highlights progress in social and economic empowerment.

As India continues on its path of economic development, an inclusive, streamlined tax framework will be essential for supporting sustainable growth. The findings of the SBI report reinforce the importance of such a framework, underscoring the positive impact of an empowered and diverse workforce on India’s economy.