‘Operation Clean Money’, data released recently by the Income Tax department shows that individuals, companies and other entities with income of Rs 5 lakh and below accounted for 69.42 per cent of the total increase.

According to a statement by the tax department, the number of returns filed as on August 5 stood at 2.83 crore as against 2.27 crore filed during the corresponding period of 2016-2017, registering an increase of 24.7 per cent compared to the growth rate of 9.9 per cent in the previous year.

The increase in total returns between April and August 2015-16, and the corresponding period in 2016-17 is 55.95 lakh. Of this, the returns filed by the below Rs 5 lakh category was 38.84 lakh, or 69.42 per cent of all returns filed.

This implies that while compliance may have improved, since the bulk of the new tax payers are those with annual income of Rs 5 lakh and below, it will hardly boost personal tax collections in the near term.

That’s because the tax liability of this category of new tax payers is limited given their relatively low income threshold with the first tax slab of 10 per cent kicking in only after Rs 2.5 lakh and with tax saving options on offer.

This means that the majority of the new taxpayers who have filed the tax returns would be contributing almost nothing to the tax revenues.

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