A bus conductor displays Indian bank rupee notes for a photograph in Coonoor, Tamil Nadu, India. (Photographer: Dhiraj Singh/Bloomberg)

Fall In Income Tax E-Filings Due To Inclusion Of Past Filings, Says Tax Department 

The Income Tax Department sought to justify a sharp 6.6 lakh drop in the number of income tax returns filed online during 2018-19 saying the number shown on its e-filing website for the financial year included returns of previous fiscal years.

While the tax department’s e-filing website showed returns filed in 2018-19 fell to 6.68 crore from 6.74 crore in the previous fiscal, the Central Board of Direct Taxes in a statement clarified that the returns filed included those of previous assessment years, excluding which returns filed in 2018-19 showed an almost 19 percent rise.

But the tax department had in the past taken returns filed in a fiscal year as a composite number to show an year-on-year increase.

The last such statement by the department had come on April 2 stating the number of income tax returns filed in 2017-18, and it did not issue a statement this year on returns filed in 2018-19.

The CBDT in its statement on Monday said the 6.74 crore income tax returns filed in the 2017-18 fiscal included 5.47 crore returns for assessment year 2017-18.

“In comparison, during FY 2018-19, a total of 6.68 crore I-T returns were e-filed which included 6.49 crore I-T returns of current assessment year 2018-19, marking an increase of almost 19 percent,” it said in a statement.

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Financial year and assessment year in income tax laws are different.

From an income tax perspective, financial is the year in which income is earned. Assessment year is the year following the financial year in which the taxpayer has to evaluate the previous year's income and pay taxes on it.

For instance, if the financial year runs from April 1, 2018, to March 31, 2019, then it is known as FY2018-19. The assessment year for the money earned during this period would begin after the financial year ends that is from April 1, 2019 to March 31, 2020. Hence, the assessment year would be AY 2019-20.

The CBDT said that during 2017-18, apart from the returns for fiscal 2016-17, nearly 1.21 crore income tax returns were filed for fiscal 2015-16. The balance number of returns filed for AY 2015-16 and prior assessment years is 0.06 crore. In comparison, during 2018-19 only 0.14 crore I-T returns for fiscal 2016-17 (AY 2017-18) were filed.

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“Thus, the apparent decrease in the number of I-T returns filed during FY 2018-19 pertaining to earlier years was due to an amendment in Section 139(5) of the Income-tax Act, 1961 brought in vide Finance Act, 2017, w.e.f. April 1, 2018, which mandated that a revised return could be furnished only upto the end of the relevant Assessment Year,” the CBDT said.

“As a result, only 0.14 crore I-T returns pertaining to AY 2017-18 were filed during 2018-19 as these were the revised I-T returns for the relevant AY which could only be filed due to change in law and no other I-T returns of any earlier AY could be filed in view of the amended provisions of law.”

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The I-T department further said that the number of paper I-T returns for AY 2017-18 was only 9.2 lakh (1.5 percent of total I-T returns filed) and the number of paper income tax returns for AY 2018-19 is 4.8 lakh (0.6 percent of total returns filed).

It is evident that most of the taxpayers have steadily switched to e-filing which is clear from the dwindling numbers of paper returns filed for AY 2018-19 compared to earlier years, the CBDT added.