About 83.9 million Indians have filed income tax returns (ITRs) for financial year 2023-24 (FY24) as of December 2024. Of these, only 28.2 million (or 34%) paid tax, while the remaining 55.7 million (66%) had zero tax liability. This data was released by the finance ministry in a response to queries during the ongoing Lok Sabha session.
Budget 2025 increased the tax rebate limit under the new regime to ₹12 lakh ( ₹12.75 lakh for salaried employees) from FY26, which essentially means those earning less than this will effectively pay no income tax.
If trends from previous years continue, at least 80% of individuals – four out of every five – who file ITRs for FY26 are expected to have zero tax liability. Here’s how.
Also read: Indians with US assets? Here’s how to plan for estate and gift taxes
Data from the Central Board of Direct Taxes (CBDT) for FY23 (assessment year 2023-24 or AY24) showed about 83.6% of all 79.7 million taxpayers reported taxable income of ₹10 lakh or less. Unless their taxable income increases by at least 20%, all these taxpayers will effectively pay zero tax under the new regime from FY26, benefiting from the full tax rebate for those with incomes up to ₹ ₹12 lakh. CBDT has not yet released data on income-wise breakup of ITR filers for FY24 (AY25).
ITRs for a particular financial year are filed the following year, which is called the assessment year. For instance, tax returns for the current financial year 2024-25 (FY25) will be filed in assessment year 2025-26 (AY26).
View Full Image
Which states have the most ITR filers?
Maharashtra, India’s wealthiest state, with a gross state domestic product (GSDP) of about ₹2.89 trillion in 2022-23, had the highest numbers of tax filers – about 12.7 million in AY25, according to data from the finance ministry.
Also read: How couples can plan taxes to make the most of old and new regimes
It was followed by Uttar Pradesh and Gujarat at second and third, with 8.31 million and 8.26 million ITRs filed, respectively. Among the southern states, Tamil Nadu had the highest number of ITR filers in AY25 – about 5.21 million.
ITR filers are up 30% since AY20
The past five years have seen a consistent increase in the number of individuals who file ITRs. From AY20 to AY25, the number of ITR filers increased by 29.6%, according to data from the finance ministry. A key reason for this could be the introduction of tax rebate limits under both income tax regimes over the past few years. Those with an income of up to ₹5 lakh get a tax rebate under the old regime. This number is currently ₹7 lakh under the new regime, and will increase to ₹12 lakh from FY26.
It’s important to note that those with incomes below the rebate limit aren’t exempt from paying income tax. They still have to file ITRs to show that while their income is above the basic exemption limit, they are eligible for a rebate and therefore not paying tax.
Also read: New regime narrows LTCG-regular income tax gap. Are equities still worth it?
An income tax officer, who did not wish to be named, told Mint this encourages small businesses, who simply didn’t file ITRs to avoid paying taxes, to file them while still not having to pay tax. This also explains why the majority of tax filers continue to have zero tax liability.