Business

India’s Gross Direct Tax Collections Double In Five Years; Driven By Tech And Compliance Gains

India’s Gross Direct Tax Collections have more than doubled over the last five years, signalling strong economic growth and improved tax compliance supported by advanced digital systems.

According to the Finance Ministry, gross direct tax collections rose from ₹12.31 lakh crore in FY 2020–21 to ₹27.02 lakh crore in FY 2024–25. This growth reflects the government’s efforts to expand the tax base and promote transparency through digital tools.

The number of Income Tax Returns (ITRs) filed jumped by 36 per cent during this period. Around 9.19 crore returns were submitted in FY 2024–25, up from 6.72 crore in FY 2020–21, indicating a widening taxpayer base.

Tech Initiatives Power Compliance Surge

The Indian tax system has seen a digital transformation over the last decade.

Starting with the Permanent Account Number (PAN) system in 1995, the reforms gained momentum with the Aadhaar-PAN linkage in 2017 to curb duplication and improve compliance.

Key developments like the Centralised Processing Centre (CPC, 2009) and TRACES (2012) enabled automated ITR processing and TDS reconciliation.

The introduction of TIN 2.0 brought real-time tax credits, multiple payment modes, and quicker refunds, improving taxpayer convenience.

The Demand Facilitation Centre in Mysuru further streamlined pending tax demands, serving as a central repository for both taxpayers and officers.

Data Analytics and Faceless Assessments Boost Efficiency

To stay ahead in the global tech landscape, the Income Tax Department launched Project Insight, a data analytics initiative to build 360-degree taxpayer profiles. This platform helps identify tax risks and ensures better compliance.

In 2019, the Faceless Assessment Scheme was introduced to reduce the human interface in tax proceedings. With automated case allocation and digital communication, it enhanced transparency and accountability.

In November 2021, the department launched the Annual Information Statement (AIS) on its Compliance Portal. This system tracks a taxpayer’s financial activity, including TDS, TCS, stock and mutual fund transactions, and other income data throughout the year.

India’s rising Gross Direct Tax Collections highlight the success of data-driven tax administration and growing public participation in the formal economy. The government plans to continue expanding these digital tools to make compliance smoother and more efficient.

Also Read: TCS To Cut Over 12,000 Jobs In FY26 Amid Tech Shift; Focus On Future-Ready Skills

Ajaypal Choudhary

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