New Delhi, May 28 -- New Delhi: India's lower-income taxpayers are rapidly exiting the return-filing net after successive tax relief measures raised the basic exemption threshold, reshaping the country's taxpayer profile.

Tax returns filed by individuals earning up to Rs.5 lakh annually fell by more than half to 27.6 million in 2025-26 from the post-pandemic peak of 56.5 million in 2023-24, according to Income Tax Department data reviewed by Mint.

The sharp decline follows the government raising the tax exemption threshold under the new tax regime from Rs.2.5 lakh to Rs.3 lakh effective FY24. In the first year after the relief came into effect, return filings from this income group dropped by about a third to 38.1 million. Returns for i...