Increasing retail participation in the stock market, among other factors, propelled Income Tax Return (ITR) filings to surge over 9 crore at the end of fiscal year 2024-2025 (FY25), data from the government’s e-filing portal showed. Experts anticipate a continuation of this trend in the current fiscal.

According to the data, as of March 31, FY25 saw a total of 9.19 crore returns filed, while the number for AY 25 (Assessment Year) stood at 8.9 crore.

The data for FY includes returns filed for various AYs, whereas data for AY pertains solely to that specific AY. The narrow gap between these figures show that growth in the number of filers is strong.

The data also showed that during FY25, over 8.4 crore returns were processed, and refunds amounting over ₹4.5 lakh crore were issued.

Reasons for increase

Hemen Asher, Partner at Bhuta Shah & Co LLP, said rising participation of retail investors in the stock market directly —substantiated by the rise in the number of demat accounts — is a key reason for the increase. “Since stock markets were extremely buoyant up to March 24 (including the IPO markets), it is safe to assume that most investors who entered the market were able to book profits on the amounts invested,” he said.

Dhruv Chopra, Managing Partner at Dewan PN Chopra & Co, listed four factors for the rise in the number. First, there is an unprecedented rise in income levels and in number of working population owed to our young demographic construct. Second, there are significant technological advancements in online systems available for filing tax returns which offer individual and other taxpayers with pre-filled information in ITRs, encompassing salary income, bank interest, dividends and more. This convenience has pushed the number of filings. Third, this technological advancement in financial reporting has greatly improved transparency and compliance which makes it compelling for an assessee to file returns. The integration of systems like GST, PAN-based reporting by banks and financial institutions—now visible in taxpayers’ Form 26AS and Annual Information Statement (AIS), has fostered a more accountable ecosystem.

“Lastly, regular emails and SMS reminders from tax department from time to time including at the time of advance tax due dates, TDS filings, ITR filings has also played a role in ensuring timely compliance by tax payers,” he said.

Asher says it will be interesting to see the number of tax fillers for the FY which is ending March 25, considering that the stock markets have been sluggish and the days of easy money not being available. On the contrary, it is possible that the majority of the people who had entered the market with a trading mindset would have incurred losses. 

From a tax standpoint, an individual is required to mandatorily file his return before July 31, 2025 to be eligible to carry forward the loss for set off in future years (irrespective of the quantum). “It would be safe to presume that the number of tax fillers for the current year will definitely increase over the last year on an absolute basis, albeit not in percentage terms,” he added.

Published on April 10, 2025