The unexpected fall in the number of tax filers in FY19 has surprised financial planners and has caught the attention of tax authorities, who are likely to swing into action to fill this gap. A research conducted by Kotak Securities revealed that a decline of 1% was recorded despite an overall 15% increase in registered tax filers in the financial year 2018-19.
Last year there were 6,74,74, 904 tax filers, a number which has fallen to 6,68,091,29, that is a drop of 6,65,775 tax filers, according to income tax department’s e-filing website.
“This is surprising given that post demonetisation it was expected that the tax base would continue to increase. It raises the question whether compliance was weaker in the latter part of FY2019, given that the number of registered filers have continued to witness a steady growth. If compliance has been weak, the new government will aim at increasing the filings and collections in FY2020,” the report said.
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Tax experts said, there are obvious reasons why this year there were less number of tax filers. Rahul Singh, manager, Taxmann.com elaborated saying the new income tax return forms (ITR) have changed the mechanism of reporting salary income. Singh further adds that the changes require a taxpayer to mention details like gross salary, amount of exempt allowances, perquisites and profit in lieu of salary, shallbe deducted or added to arrive at taxable figure of income.
“This reporting can’t be done without having Form 16 which is generally issued in the month of June. Thus, there is fall in filing of return of income in April month,” he said. Form 16 is a proof of Tax Deducted at Source (TDS) expurgated from your salary every month. It also shows how much TDS has been deposited with the income tax department for financial year concerned.
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Harshvardhan Roongta, CFP, Roongta Securities, said, this year the number of tax filers should have gone up instead of going down as the government has been working towards widening the tax base and increasing tax revenue by putting in place strict compliance rules.
Another reason for decline in the number of tax filers cited by tax experts is the May 31, 2019 due date for filing of Form 24Q, which is TDS return in respect of salary.
The due date May 31, 2019 for filing of Form 24Q is yet another reason why many tax filers take a back seat.
According to Dipen Mittal, a chartered accountant, the CBDT has made changes under Form 24Q to sync it with the reporting requirements of new income-tax return forms.
“The department has not issued the updated utility for filing of form 24Q yet. Therefore, employers are waiting for the release of the utility for filing of TDS return. Consequently, taxpayers who want to claim TDS credit are not being able to file their ITR,” he added.
