The number of income tax payers rose to 84.5 million in the 2018-19 assessment year, a jump of 13.8% from the previous year in line with double-digit growth in tax receipts and the number of returns filed, official data showed on Friday.

Data also showed that since the roll-out of the goods and services tax (GST) in 2017, the share of income tax in the central government’s total tax receipts has also gone up.

Successive rounds of GST rate cuts as well as the improvement in income tax compliance have led to direct taxes’ share going up from 52.2% in fiscal 2017-18 to almost 55% in fiscal 2018-19.

Experts say that direct tax compliance often improves when indirect tax systems are reformed.

The growth rate in the number of taxpayers in assessment year 2018-19—the year in which returns are filed for the income earned in FY18—is an improvement over the 7.25% growth seen in the previous year when 74.2 million taxpayers were reported.

Taxpayers include both return filers as well as those having their taxes deducted at source but have not filed returns.

The number of taxpayers is a dynamic group which reflects the net result of new persons getting added and some taxpayers going out of the tax net for various reasons including death or income loss.

The growth in the number of taxpayers reflects the double-digit growth in income tax collections in the three fiscal years up to FY19, although revenue collection growth rate in FY19 has been slower than in the year before due to the economic slowdown. Direct tax collection growth had slowed down from 18% in FY18 to 13.5% in FY19.

The corporate tax rate cuts announced last month are expected to cost the exchequer about ₹1.45 trillion in the current fiscal, assuming most eligible businesses opt for the low tax scheme. It is possible that some businesses may opt for staying in the 30% tax slab and enjoy the tax incentives that lower their actual tax outgo.

The data released by the income tax department shows that there were 63.3 million tax return filers in FY19, about 22% more than the 54 million a year ago.

Buoyancy of direct tax, which shows how tax collection growth fared in comparison to nominal economic growth rate, eased in FY19 to 1.21, after a decade high growth of 1.59 in FY18, the year after demonetization. A number exceeding one shows tax collection growth surpassing economic growth rate.

This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.

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