Most tax filers report zero income tax liability

  • July 25, 2023
  • Posted by: OptimizeIAS Team
  • Category: DPN Topics
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Most tax filers report zero income tax liability

Subject: Economy

Section: Fiscal Policy

Context:

70% ITR fillers have zero tax liability as per data presented to the Parliament by finance minister.

Key Points:

  • Around 70% of people who filed income tax returns in FY23 reported no tax liability.
  • In FY23, 7.4 crore persons filed income tax returns but 5.16 crore reported zero tax liability, showed the data. That represents 70% of all tax return filers.
  • There has been a 6.18 % increase in the number of persons filing income tax returns in FY23.
    • The government took several steps to increase the number of tax return filers, the minister said.
    • The scope of Tax Deducted at Source / Tax Collected at Source (TDS/TCS) has been expanded by bringing several new transactions into their ambit.
    • Newer points of taxation include TDS/TCS on huge cash withdrawals, foreign remittance, purchase of luxury car, e-commerce participants, sale of goods, acquisition of immovable of property, purchase of overseas tour programme, transfer of virtual digital assets, net winnings from online games and interest on listed debentures paid to the resident.
Income Tax Liability

  • Tax liability is the amount of money in the form of tax debt you owe to tax authorities. It is the total amount of tax you are liable to pay to the government.
  • Taxes are applicable to the income you earn in a service or business, interest income of various investment avenues, capital gains on stocks, income from other sources such as winning a lottery, horse race etc. house rent and more.
  • The Indian Income tax act of 1961 has set laws in relation to the amount of tax to be charged, exemption limit etc.
  • Based on income category, tax liability is decided:

Tax slab                                  Rate

Up to ₹2,50,000*Nil
₹2,50,001 to ₹5,00,0005% of net total income exceeding ₹2,50,000
₹5,00,001 to ₹10,00,00020% of net total income exceeding ₹5,00,000 + ₹12,500
Above ₹10,00,00030% of net total income exceeding ₹10,00,000 + ₹1,12,500

Tax base:

The tax base is the total amount of assets or revenue that a government can charge tax on. For example, the assessed value is the tax base for property taxes and taxable income is the tax base for income tax. It can also be defined as the total of taxable income, taxable assets, and the assessed value of property within the government tax jurisdiction.

Widening of text base mean that the people who are filing returns should be much more.

economy Most tax filers report zero income tax liability