India has witnessed a strong rise in income tax filings and non-corporate tax collections, exhibiting a broader tax base and more assertive formalisation of the economy, as specified by the Economic Survey 2025-26.
In the survey, it cited that the ITR submitted between 2024-25 touched 9.2 crore, compared to 6.9 crore in 2021-22. The same specifies a rise of exceeding than 2.3 crore taxpayers in just three years. The same surge shows higher compliance, effective use of digital tools, and expansion of formal employment and business activity.
The Survey highlighted that tax policy reforms and improved administration were key drivers of this growth. Initiatives such as faceless assessments, pre-filled returns, faster refunds, and the use of data analytics have helped bring more individuals and small businesses into the tax net.
A robust growth has been recorded by non-corporate tax collections. As per the Survey, non-corporate taxes stood at 3.3% of GDP in 2024-25, an increase from 2.4 percent of GDP in 2021–22. Taxes paid by individuals, professionals, small traders, and partnership firms are the non-corporate taxes. The same surge exhibits effective income reporting by self-employed persons and unincorporated businesses.
In the post-pandemic period, the share of direct taxes in gross tax revenue has surged. At present, Direct taxes account for a larger portion of total tax collections compared to the pre-pandemic years. From the Survey the same transformation exhibits a balanced and stable tax structure.
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Revenue receipts of the Centre enhanced to 9.1% of GDP in 2024-25, compared to 8.5% in the pre-pandemic average. The Gross tax revenue has surged to 11.5% of GDP from a pre-pandemic average of 10.8%. The government stated that the increase in revenue has facilitated higher capital spending while weakening fiscal discipline.
The Economic Survey noted that improved tax compliance is also associated with growth in formal employment, the expansion of the Goods and Services Tax (GST), and a rise in digital transactions. The increased use of PAN, Aadhaar, and GST data has enhanced the tracking of income flows.
The Economic Survey emphasised that expanding the tax base is essential for financing public investments, welfare programs, and sustainable long-term growth, all while ensuring that the fiscal deficit is reduced in a credible manner.