Gujarat emerges as most tax-compliant state in AY19, Bihar least compliant

An assessment year is the year in which one files their returns, for the preceding financial year. Income earned during the financial year is evaluated by the department in the AY
Gujarat was the most tax-compliant state in assessment year 2018-19, based on the proportion of ‘returns filed to PAN holders’. The state saw 22.3 per cent inco­me tax (I-T) returns filers (of the total PAN holders), followed by Delhi with a filing rate of 20.5 per cent, Punjab with 16.74 per cent, and Telangana with 16.68 per cent.

Among large states, the lowest rate of filing was seen in Bihar at 5 per cent, followed by UP at 8.11 per cent — much below the national average of 12 per cent.

The returns filing data may not be the most accurate indicator of compliance, given it is not mandatory for all PAN holders to file returns. Though companies and businesses are supposed to file returns even in case of ‘nil’ income, that is not the case with individuals.

In the case of individuals, filing of returns is mandatory for those with total income above Rs 2.5 lakh. For senior citizens, the threshold is Rs 3 lakh.

Bihar also had the lowest proportion of cases picked up for scrutiny, at 0.08 per cent of all returns filed. This was a sharp drop from the 0.42 per cent in AY18. Jharkhand was next, with only 0.09 per cent picked up for scrutiny in AY19, down from 0.3 per cent in AY18. Delhi saw the highest proportion of scrutiny, with 0.52 per cent of filers facing a probe in AY19, down from 0.81 per cent in AY18. It was followed by Telangana at 0.5 per cent.

Cases picked up for scrutiny halved to 0.25 per cent of the overall returns filed, in AY19, from 0.55 per cent in AY18. The number of scrutiny cases was 0.71 per cent in AY16 and 0.4 per cent in AY17.

“The I-T department is changing from just enforcement to facilitating better taxpayer services. In continuation of the same, the number of cases selected for scrutiny has reduced drastically over the years,” the Ministry of Finance said in a tweet.

An assessment year is the year in which one files their returns, for the preceding financial year. Income earned during the FY is evaluated by the department in the AY. The ministry did not disclose the absolute number of cases picked up for scrutiny during these years. The number of returns filed during AY19 — the year following demonetisation — rose sharply compared to AY18.

Jharkhand saw the number of filers rise 23 per cent in AY18 from 3.5 per cent in FY17. Karnataka saw the number of filers grow 19.5 per cent in AY18, versus a 1.9 per cent growth in AY17. Haryana reported a rise of 16.7 per cent in AY18 against 3.5 per cent the previous year.

In Odisha, the figure reduced to 0.12 per cent from 0.37 per cent, while for Punjab, it dropped to 0.14 per cent from 0.40 per cent. In West Bengal, 0.25 per cent cases were picked up for scrutiny, compared to 0.59 per cent last year.

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