Number of people earning ₹5-10 lakh tripled in 3 years:A record 10 crore individuals are set to file returns this year, showing more honest income reporting

The central government’s decision to enhance income tax exemptions has triggered an unexpected trend. Contrary to earlier fears that the number of tax return filers would decline, the share of individuals reporting incomes between ₹5 lakh and ₹10 lakh has risen 2.8 times over the past three years. In FY 2023–24, 16.39% of taxpayers filed returns in the ₹5–10 lakh income bracket. This jumped to 37% in FY 2024–25, and further to 46% in FY 2025–26. Starting FY 2025–26, under the new tax regime, incomes up to ₹12 lakh will be exempt from tax. For salaried employees, the ₹75,000 standard deduction effectively raises this limit to ₹12.75 lakh. The Fear Has Faded… and That’s Why People Are Coming Forward 1. Fear of notices has subsided: According to Chandrashekhar Chitale, former Chairman of the ICAI’s Direct Taxes Committee, taxpayers now see the higher exemption limit as a form of security. Earlier, many small businesses hesitated to report their income due to the fear of receiving tax notices. 2. No incentive to hide income: When most of one’s income becomes tax-free, taxpayers feel more comfortable declaring it fully. This brings peace of mind—and when honesty costs nothing, people naturally choose to be honest. 3. Digital tracking encourages compliance: With systems like UPI, GST, and AIS, transaction trails are easier to track. As a result, taxpayers are increasingly following the rules. 4. Higher exemption: The increased limit gives those who under-reported income in the past a chance to “set things right” without fear. 5. Rising incomes reflect real economic growth: A part of this trend also comes from improving prosperity. Many Indians now earn more, thanks to the growth of formal jobs, the gig economy, and expanding small businesses. Income Tax Collections to Cross ₹25 Lakh Crore for the First Time The Centre informed Parliament that over the past five years, taxpayers—including corporates, HUFs, and individuals—received rebates totalling ₹13.23 lakh crore, yet tax collections did not decline. For the first time, the tax collection target has been set at ₹25.2 lakh crore, a 13.36% rise from last year’s ₹22.26 lakh crore—even after making income up to ₹12.75 lakh tax-free. Record Number of Return Filers Expected Between FY 2022–23 and FY 2023–24, the number of return filers grew by 1.39 crore. This year, the figure is expected to hit a historic 10 crore. By Oct 31, filings had already crossed 8 crore—and this does not include audits or company returns.