In an indication of significant improvement in the formalisation of the economy, Union Finance Minister Nirmala Sitharaman on Tuesday said there has been a threefold increase in income tax filing in each bracket.
“Each tax bracket, that is, the tax slabs, has seen a minimum threefold increase in tax filing. Some even achieved a nearly fourfold surge,” she said at the Global Fintech Fest 2023 here. “We are in Mumbai, so, contextually I would like to highlight that Maharashtra continues to be the leader. In the northeast, Chhattisgarh, and J&K, ITR filing is up by two digits, which augurs well for the ecosystem.”
In this context, she said that the taxable workforce will increase from 22.5 per cent to 85.3 per cent in the next 25 years. “In 2047, there will be 482 million income tax filers, up from 70 million in FY23,” she said.
Moreover, the finance minister called on banks and financial institutions to ensure that their customers designate heirs, a move aimed at reducing unclaimed funds. She stressed the need for the entire financial ecosystem, including mutual funds and stock markets, to be mindful of this responsibility when handling customer funds.
“I want the banking system, the financial ecosystem, and everybody to keep in mind that when someone deals with his money, the organisations will have to think about the future and ensure that they (customers) nominate their heir, and give the name and address," she said.
Sitharaman also pointed out the risks associated with tax havens and the illicit movement of money, underscoring the necessity of global cooperation and frameworks to address threats emerging from areas, such as cryptocurrencies. She emphasised that despite efforts to build firewalls, new and evolving methods of attack pose challenges in the crypto landscape, presenting both threats and opportunities.
The finance minister said that India’s G20 presidency has initiated discussions regarding the regulation and understanding of a framework for handling crypto assets. These discussions encompass a wide range of topics, including content-rich papers from institutions like the International Monetary Fund, the Financial Stability Board, and the Organisation for Economic Cooperation and Development. She highlighted the release of the IMF and FSB synthesis paper on crypto assets and stressed that a responsible financial ecosystem hinges on global collaboration.
“India’s presidency has put on the table, in the G20, issues related to regulating or understanding that there should be a framework for handling issues related to crypto assets. Active discussions are happening. Content-rich papers from institutions – the IMF, FSB, and OECD -- are all being discussed on various issues." she said.
Observing that fintech has evolved into a powerful tool for promoting financial inclusion, the finance minister said the Open Network for Digital Commerce (ONDC) is positioned to make a significant impact on e-commerce, much like the transformative role played by the Unified Payments Interface.
“The government’s efforts in creating UPI democratised payments, and ONDC is now doing it for e-commerce. Fintechs are driving more inclusion and creating their niche,” she said.
The ONDC, established as a non-profit entity, serves as a network where sellers can showcase their goods and services across various participating apps and platforms. It employs open standards and protocols to streamline tasks, such as product listing, inventory control, and order processing. The goal is to present an alternative to dominant platforms, ultimately empowering small-scale sellers, and enhancing customer options through an interoperable decentralised network.