While the government is yet to disclose the total amount of deposits collected by banks during the demonetisation exercise, it has been prompt in reporting an increase in the number of tax returns filed. If the latest income tax return (ITR) data is anything to go by, increased collections could soon follow increased compliance. The Central Board of Direct Taxes (CBDT) announced that more than 2.83 crore income tax returns were filed for FY17, a jump of nearly 25% from the 2.27 crore tax returns filed in FY16. The entire tax collection details have not been shared but the credit for the increased tax compliance is being attributed to demonetisation and the government’s “Operation Clean Money”.
If one goes through an earlier set of numbers released by the I-T department, the number of individual income tax assessees for FY16 was 5.7 crore. This figure also includes cases where tax deduction took place at the source from the income of the taxpayer without the latter having filed the return of income. The estimated number of individual assessees for FY17 is 5.9 crore. Even if one goes by the newly minted number of 2.83 crore returns, it means that statutory compliance is still trumping voluntary individual filings. It would make more sense to wait for the full set of collection data to see if indeed a new set of taxpayers have entered the system, rather than get carried away by glossy headlines.