Direct tax data: Cost of collection goes down even as direct tax kitty swells 

The income tax department is spending more on collection of direct taxes even as the number of taxpayers has increased substantially, according to official data, indicating the role of greater interface with technology and higher compliance. 

According to the Consolidated Time-Series data on direct taxes that was released by the Central Board of Direct Taxes on Tuesday, the cost of collection has decreased from 0.57% of total collection in the fiscal year 2013-14 to 0.51% of total collection in the fiscal year 2022-23. It was as high as 1.36% of the total collections in 2000-01 but has steadily declined over the years. 

It should, however, be kept in mind that the expenditure on collection of taxes has increased in absolute terms to Rs 8,452 crore in FY23 from Rs 3,641 crore in FY14. Lower cost of collection indicates a more efficient tax system.  

Net direct tax collections meanwhile jumped up by 160.52% to Rs 16,63,686 crore in FY23 from Rs. 6,38,596 crore in FY14. Gross direct tax collections shot up by a similar 173.31% to Rs 19,72,248 crore in FY23 from Rs 7,21,604 crore in FY14.  

Tax deducted at source remained the largest component of direct taxes at Rs 8.17 lakh crore in FY23, advance tax amounted to Rs 7.27 lakh. Significantly, tax paid through self-assessment was the third largest contributor to the direct tax kitty with payments of a little less than Rs 1.3 lakh crore last fiscal.  

The updated data also reveals that the number of income tax payers rose to 9.37 crore in FY 23 from 5.26 crore in FY14. “A ‘Taxpayer’ is a person who either has filed a return of income for the relevant Assessment Year (AY) or in whose case tax has been deducted at source in the relevant Financial Year but the taxpayer has not filed the return of income,” the CBDT said.  

The total number of tax returns filed in FY23 rose to 7.78 crore, registering a 104.91% jump from 3.8 crore returns filed in FY14.  

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