Rising ITR-2 Filings Coincide with Increased Investments in Stocks & Mutual Funds

• Pavithra K M

TL;DR Income Tax Return (ITR) filings in India have grown steadily, reaching 8.9 crore in AY 2024–25, up from 6.5 crore in AY 2018–19. The composition of return types is shifting, with salaried taxpayers (ITR-1) still dominating, though their share is falling, while returns under ITR-2 (capital gains/complex incomes) and ITR-4 (small businesses/professionals) have risen.

Context:
Income Tax Returns (ITRs) are filed annually by individuals, businesses, and entities to declare income and pay applicable taxes. Different return types apply depending on the source and structure of income:

• ITR-1: Salaried individuals with income up to ₹50 lakh.
• ITR-2: Individuals/HUFs with income from capital gains, foreign income, etc.
• ITR-3: Individuals/HUFs with business or professional income.
• ITR-4: Presumptive income for small businesses and professionals.
• ITR-5: Firms, LLPs, AOPs, BOIs.
• ITR-6: Companies (except those claiming exemptions).
• ITR-7: Trusts, political parties, charitable institutions.

Assessment Year vs. Financial Year in ITR filing: A Financial Year (FY) is when income is earned (e.g. FY 2023–24 is April 2023 to March 2024), while the corresponding Assessment Year (AY) is when that income is assessed and returns are filed (e.g. AY 2024–25 is the period between April 2024 and March 2025 when the returns are filed). Here, we use AY for analysis as it avoids double-counting, unlike FY totals, which also include belated or revised filings from past years.

Who Compiles this Data?
The Central Board of Direct Taxes (CBDT) under the Ministry of Finance compiles and publishes official statistics on ITR filings through press releases and updates on the Income Tax Department portal.

Where can I download clean & structured data related to ITRs filed?
Cleaned, structured, and ready-to-use datasets related to ITR filings can be downloaded from the collection on Dataful. These include monthly data on ITR filings categorised by type, by state and by income range. A dataset is also available on state and year-wise zero liabilities filed.

Key Insights

• ITR filings have steadily risen, with nearly 8.9 crore returns filed in AY 2024–25, compared to 8.3 crore in AY 2023–24.
• Data for AY 2025–26 (till 31 August 2025) shows that about 48% of the ITRs compared to the number for AY 2024-25 are filed as of 31 August 2025. The number is bound to increase as the last day for filing ITR for AY 2025-26 was initially extended till 15 September 2025, and then to 16 September 2025.
• In fact, a post on the official X account of the Income Tax Department states that 7.3 crore+ ITRs were filed till 15 September 2025 for AY 2025-16, surpassing the previous year’s figures by the same time.

• Salaried taxpayers (ITR-1) remain the largest group, but their share fell from nearly 48% in AY 2018–19 to about 40% in AY 2024–25.

• Returns from individuals with capital gains/complex income (ITR-2) and small businesses/professionals under presumptive tax (ITR-4) have grown sharply, together accounting for nearly 40% of filings. In fact, the share of ITR-2 returns has almost doubled during this period.

• ITR-3 (business/professional income under normal provisions) has held steady around 15–17%, while corporate/firm/trust filings (ITR-5, 6, 7) remain small but consistent.

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Why Does It Matter?
Tracking ITR filing trends helps understand how many people are being brought under the tax net, how compliance is changing, and whether reforms such as the simplified new tax regimes, higher exemption limits, simplified forms, etc., are working.

Even though filings are increasing, they still represent a small fraction of India’s population. According to a parliament response, in FY 2023–24, over 8.09 crore people filed ITRs, which amounted to only 6.68% of the population. Of these, about 5.5 crore individuals, accounting for nearly 70%, reported zero tax liability. This highlights how only a very small share of Indians actually pay direct taxes.

Key numbers

• Total ITRs filed: 6.5 crore (AY 2018–19) → 7.8 crore (AY 2023–24) → 8.9 crore (AY 2024–25)
• Composition shift: ITR-1 share declined (48% → 40%), while ITR-2 rose (7% → 13.6%).
• Limited coverage: Only 6.68% of the population filed ITRs in FY 2023–24, with ~70% (5.5 crore) reporting zero tax liability.