Income tax refunds jump 474% in 11 years—outpacing collection growth
What's the story
India's income tax refunds have skyrocketed by a whopping 474% over the past 11 years, reaching ₹4.77 lakh crore in FY 2024-25. The massive increase outpaces the gross tax collections, which grew by a comparatively modest 274% during the same period. The improvement is largely due to enhanced tax administration and digital infrastructure, making the refund process faster and more efficient for taxpayers across the country.
Time efficiency
Processing time for refunds reduced by 81%
The time taken to process refunds has also seen a major reduction, from 93 days in 2013 to just 17 days in 2024. This is an improvement of a whopping 81% over the years. In FY 2013-14, the last year of UPA's rule, the Income Tax Department issued refunds worth ₹83,008 crore. By FY 2024-25, under NDA's rule for over a decade now, this number had grown by an astounding 474%.
Compliance
Number of income tax returns filed jumps by 133%
The number of income tax returns (ITRs) filed has also seen a massive jump, growing by 133% since 2013. From 3.8 crore ITRs in 2013, the number rose to an impressive 8.89 crore in 2024. This shows that more and more taxpayers are complying with their tax obligations, contributing to the overall growth of India's tax system.
Efficiency
Higher refunds signal improved compliance and taxpayer services
Refunds as a proportion of gross direct taxes collected also increased to 17.6% in FY 2024-25, up from 11.5% in FY 2013-14. This increase is indicative of the growing formalization and voluntary compliance within India's tax system. The rise in refunds as a proportion of gross tax collected reflects improvements in taxpayer services and efficient processing mechanisms implemented by the Income Tax Department over the years.