India’s taxpayer profile is undergoing a structural shift, with more individuals earning from multiple sources rather than relying only on salary, according to How India Filed in 2025, the latest annual filing report released by a India’s largest digital tax filing platform.
The report, based on income tax return data for the latest assessment year, points to the rise of what it calls “hybrid” taxpayers, individuals who combine salary income with earnings from capital markets, business activities, or trading.
Sharp rise in complex tax filings
One of the most notable trends highlighted by them is the surge in complex tax returns. Filings under ITR-3, typically used by those reporting business income, trading profits, or derivatives activity, rose by 45 per cent year-on-year. At the same time, ITR-2 filings grew 17 per cent, largely driven by capital gains and investment income.
This indicates that tax returns are no longer simple salary declarations. Instead, they are increasingly capturing the full financial activity of individuals over the year, including market-linked income and non-salary earnings.
Millennials and Gen Z lead the shift
The report shows that younger taxpayers are at the centre of this change. Those aged 25–35 years now account for more than 42 per cent of ITR-3 filers. Even taxpayers below the age of 25 are entering the tax system with early exposure to investing, with many reporting capital gains in their first tax return.
This marks a departure from earlier patterns, where most individuals began investing much later in their careers. For today’s young earners, market participation is becoming a starting point rather than a milestone.
Multiple income streams become the new normal
Findings suggested by them that is earning from multiple sources is fast becoming the default for urban professionals. Many taxpayers now balance salary income with trading, long-term investments, or business earnings. Careers are increasingly being treated like financial portfolios, with different income streams serving different purposes — stability, growth, and wealth creation.
What does this mean for tax compliance?
According to the report, this shift has important implications for tax compliance. As more individuals move beyond single-income structures, tax filings are becoming more complex, even for non-wealthy earners. This is pushing greater reliance on digital tools and professional assistance to manage compliance accurately.
The founder and chief executive officer of the digital tax filing platform, has indicated that these trends reflect deeper changes in how Indians earn, invest, and plan their financial lives, signalling a long-term transformation rather than a short-term spike.
Overall, the reports suggests that India’s tax system is gradually adapting to a multi-income economy, mirroring the evolving financial behaviour of its taxpayers.
