About 66.5 per cent of the income tax return filers have zero tax liability, data presented in Lok Sabha on Monday showed. The number nearly doubled in FY25 as compared to FY20.
In a written reply, the Minister of State for Finance Pankaj Chaudhary presented the data about income tax return filers. It showed that the number of return filers stood at 6.48 crore in FY19-20, which rose to 8.39 crore in the current fiscal (as on December 31). In FY20, the number of return filers with zero tax liability was 2.9 crore or 44.75 per cent of the total filers. Now, the number and share in FY25 are 5.58 crore and 66.5 per cent respectively.
Nil-tax slab effect
Although the number of zero tax liability filers rose by 92 per cent in FY25 as compared to FY20, yet the current fiscal share is the lowest in five years. The government’s response in Parliament did not mention the reasons for the high number of filers with zero tax liability, but tax experts said it is because the ‘Nil’ tax slab has been steadily increasing. After 2014, the ‘Nil tax’ slab was raised to ₹2.5 lakh, which was further raised to ₹5 lakh in 2019 and to ₹7 lakh in 2023. This means that people in this slab of annual income are not required to pay income tax on account of rebate but they still have to file Income Tax Returns to avail the return.
The expectation is that the number of filers with zero tax liability will go up further not just in the number but also in share. This is because any individual, who was earlier was required to pay a tax of ₹80,000 (in the new regime) for an income of ₹12 lakh, will be required to pay Nil tax on such income. These taxpayers will have to file ITR to avail the rebate. By increasing the threshold, around one crore assessees wil be added to the number of filers with zero tax liability.
