Four of every five people who will file returns for FY26 likely to pay no tax, data shows
About 83.9 million Indians have filed income tax returns (ITRs) for financial year 2023-24 (FY24) as of December 2024. Of these, only 28.2 million (or 34%) paid tax, while the remaining 55.7 million (66%) had zero tax liability. This data was released by the finance ministry in a response to queries during the ongoing Lok Sabha session.
Budget 2025 increased the tax rebate limit under the new regime to ₹12 lakh ( ₹12.75 lakh for salaried employees) from FY26, which essentially means those earning less than this will effectively pay no income tax.
If trends from previous years continue, at least 80% of individuals – four out of every five – who file ITRs for FY26 are expected to have zero tax liability. Here’s how.
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Data from the Central Board of Direct Taxes (CBDT) for FY23 (assessment year 2023-24 or AY24) showed about 83.6% of all 79.7 million taxpayers reported taxable income of ₹10 lakh or less. Unless their taxable income increases by at least 20%, all these taxpayers will effectively pay zero tax under the new regime from FY26, benefiting from the full tax rebate for those with incomes up to ₹ ₹12 lakh. CBDT has not yet released data on income-wise breakup of ITR filers for FY24 (AY25).
ITRs for a particular financial year are filed the following year, which is called the assessment year. For instance, tax returns for the current financial year 2024-25 (FY25) will be filed in assessment year 2025-26 (AY26).
Maharashtra, India’s wealthiest state, with a gross state domestic product (GSDP) of about ₹2.89 trillion in 2022-23, had the highest numbers of tax filers – about 12.7 million in AY25, according to data from the finance ministry.
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