As per the report, there has been a reduction in the number of people who file ITR (Income Tax Returns) by 1 per cent in FY 2019 even though the government has tried much to expand the tax base further indicated a deep recession in the overall economy.
In 2016, the government took a very big step of demonetisation due to which the economy of India was affected badly. But the government think that because of demonetisation, the tax base has been increased.
Brokerage Kotak Securities said on 1st May that last year 67.5 million ITR forms were filed whereas this year only 66.8 million were filed which is 1 per cent down.
A note said “This is surprising given that post-demonetisation, it was expected that the tax base would continue to increase. Such a happening is a worry from the fiscal math perspective”.
The report has come as a warning because of the fall in the income tax return filing is indicating towards the reduction in the comfort to the economy and the economic activities will also slowdown which is not a piece of good news for everyone as it will harm the economy of India.
The report raised questions regarding the compliance that was it weaker in the Financial Year 2019 as compared to the last FY. It also expects that the new government will focus on this problem and the filings and collections in FY 2020 must be aimed to be higher.
It warned “The government needs to look at further expanding the tax base (optimally using the data repository from note-ban and GST). Without a significant improvement in the tax base, the medium-term growth path will be at risk”.
The brokerage indicated that the higher income brackets saw the rise in the filers. He also said that data analytics will be given the responsibility to handle it.
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As long as the expenditure does not rationalize, a relatively silent filing increment will move forward on a “slippery slope” in an already stressed financial calculation.