The Income Tax Department has announced that more than 5 crore income tax returns have been filed for the annual year 2024-25 as of July 26. This represents an 8% increase compared to the previous year. On July 26 alone, over 28 lakh ITRs were received. The deadline for filing returns for this fiscal year is on Wednesday. The department's technology partner, Infosys Ltd., has assured uninterrupted services for the e-filing portal [a061ac96].
The increase in the number of income tax filings reflects the ongoing efforts of individuals to comply with their tax obligations. It also indicates a higher level of participation in the formal economy, which is crucial for revenue collection and economic growth. The Income Tax Department plays a vital role in ensuring that taxpayers fulfill their responsibilities and contribute to the nation's development [a061ac96].
According to the latest estimates from the White House Office of Information and Regulatory Affairs (OIRA), tax complexity in the US economy costs over $546 billion annually [a0a1c651]. Americans will spend more than 7.9 billion hours complying with IRS tax filing and reporting requirements in 2024, costing the economy roughly $413 billion in lost productivity. In addition, Americans spend roughly $133 billion annually in out-of-pocket costs to comply with the tax code. The total compliance costs amount to nearly 2 percent of GDP. The IRS estimates that over half of the individual income tax compliance costs are associated with reporting and substantiating income. Businesses bear most of the remaining tax compliance burden, with the compliance cost of business income tax returns being nearly $119 billion. The tax compliance burden on US businesses is split among various tax forms, including corporate income tax returns, quarterly tax filings, and depreciation schedules. The IRS estimates that it takes 105 hours on average for corporations to comply with form 1120, the main form for taxable corporations. The compliance burden has increased due to new reporting rules on cryptocurrency transactions, which added 1.4 billion hours to the total compliance burden. Taxpayer compliance now comprises 66 percent of the total hours Americans spend complying with federal paperwork and 72 percent of the government-wide out-of-pocket costs for regulations. The tax compliance burden costs are equal to 1.9 percent of US GDP and 26 times the IRS's 2024 annual budget.
The increase in tax complexity and compliance costs highlights the challenges faced by individuals and businesses in navigating the US tax system. It underscores the need for ongoing efforts to simplify the tax code and reduce the burden on taxpayers. Streamlining the tax filing process and implementing clearer regulations can help alleviate the economic impact of tax complexity and promote greater efficiency in the US economy [a0a1c651].
According to a report published by the Tax Foundation on August 6, 2024, tax compliance costs the US economy over $546 billion. The report states that the billions of hours spent completing IRS forms and tax returns, along with compliance costs, contribute to this significant economic burden. The Tax Foundation report emphasizes the need to address tax complexity and reduce compliance costs to promote economic growth [47f72ac8].