The latest data released by the Indian Income Tax Department state that income-tax electronic filings in fiscal year 2019 have dropped by more than 660,000. The income-tax e-filings in FY2018-19 totaled 66.8 million, down from 67.4 million in the previous fiscal year. E-filers in FY2016-17 were 52.8 million.
When the Narendra Modi government carried out the shock demonetization of high-value currency notes in November 2016, it claimed that one of its aims was to increase the tax base and compliance.
In terms of compliance, this year’s was one of the lowest in recent times. The ratio of actual filings to registered filers was 79% in FY2018-19, down from 91.6% in the previous fiscal year. The compliance ratio was 85% and 83% in the preceding two years. It was 79.3% in FY2014-15, which was a decline from 82% of FY2013-14.
It must be noted that the number of people who have registered to file income-tax has been rising steadily over the years. From a mere 27 million in 2013, it doubled to 52 million in 2016, and on March 31, 2019, it was 84.5 million.
The latest slide in the number of people filing income tax has worried analysts as they fear that tax filings may have hit a plateau. However, one positive fallout is the steady rise in income-tax filers earning an annual income between 500,000 and one million rupees. In FY2018-19 it was 10.5 million, with a major chunk, 10.2 million, being individual taxpayers.
The Indian Finance Ministry had come out with a report stating that the economy slowed down marginally in the last fiscal year (2018-19). The reasons cited were declining growth of private consumption, a weak increase in fixed investment and muted exports.
Also read: India’s growth slowed in FY19: Report
It had conceded that the farm sector was facing a slowdown and it would be an uphill task to reverse it. The ministry also said it would be a challenge to sustain growth in the industry.
The manifestation of slowing private consumption can be clearly seen in the automotive sector with both car and two-wheeler sales on the decline. The reasons cited are frequent changes in fuel prices, higher insurance costs and the general anxiety associated with the ongoing general elections.
A recent report on unemployment produced by the government’s National Sample Survey Office (NSSO) has claimed that the country’s jobless rate reached a 45-year high in the 2017-18 fiscal year. It noted that in 2017-18, unemployment rose to 6.1%, the highest since 1972-73. In 2011-12 the unemployment rate was just 2.1%.
Also read: India’s jobs data leaves Modi govt red-faced
A report by Azim Premji University‘s Center for Sustainable Employment stated that 5 million people lost their jobs after the 2016 demonetization. The report also states that the unemployment rate in the country had been steadily on the rise in the last decade, and hit its worst levels after 2016.