75% young taxpayers file complex ITRs: How India's wealth creation is changing

Young Indians are no longer relying only on their monthly salaries to build wealth. From investing in stocks and cryptocurrencies to freelancing and running independent businesses, many are exploring different ways to earn and grow their money. This shift is also showing up in their income tax returns, with a growing number of young taxpayers filing more complex returns.

According to ClearTax's Income Tax Return (ITR) filing data for Assessment Year (AY) 2026-27, 75% of self-filers below the age of 25 filed complex returns, compared with 60% in the previous assessment year. The trend points to younger Indians taking a more active role in investments and income-generating activities beyond regular employment.advertisement❮❯ Read Full StoryYOUNG TAXPAYERS ARE MOVING BEYOND SALARY INCOMEThe growing number of complex tax returns suggests that young Indians are increasingly earning from sources other than salaries.

The data shows that among taxpayers below 25, the share of ITR-3 filings rose from 28% in AY 2025-26 to 44% in AY 2026-27. At the same time, ITR-1 filings fell from 41% to 25%.

ITR-3 is generally used by individuals earning income from business or professional activities, while ITR-1 is meant for eligible taxpayers with relatively straightforward income, such as salary, one house property and other specified sources.

The share of ITR-4 filings among under-25 taxpayers also increased from 8.9% in AY 2024-25 to 15.2% in AY 2026-27. This return is used by eligible individuals with income from certain businesses and professions under the presumptive taxation scheme.

The rise suggests that more young people are exploring freelancing, consulting and independent business activities instead of depending entirely on a regular job.

The shift is not limited to younger taxpayers. The data shows that Indians across age and income groups are increasingly reporting earnings from investments, businesses, freelancing and cryptocurrencies.

In AY 2026-27, 47% of self-filers reported income from investments, business, freelancing or cryptocurrency. This was significantly higher than 9.5% in AY 2022-23.

The number of taxpayers reporting two or more such non-salary income sources has also increased. Their share rose from 3.5% in AY 2022-23 to 24% in AY 2026-27.

This indicates that multiple income streams are becoming more common, with individuals looking beyond their regular salaries to build financial security.MIDDLE-INCOME TAXPAYERS ARE ALSO INVESTING MORE

Interestingly, the growing interest in investments is not restricted to high-income households.

Nearly 49.6% of self-filers in the annual income bracket of Rs 5 lakh to Rs 10 lakh filed complex returns in AY 2026-27. This was higher than 36.2% in the previous assessment year.

The trend suggests that even taxpayers with relatively modest incomes are participating in financial markets and exploring different ways to grow their savings.

Women are also becoming more active investors. ClearTax data shows that 30.5% of women filers reported capital gains in AY 2026-27, up from 26.1% in AY 2025-26.

The share of women self-filers earning more than Rs 50 lakh also increased from 3.7% to 5.1% during the same period.OLDER INDIANS CONTINUE TO INVEST AFTER RETIREMENT

Investment activity is not slowing down as people get older. In fact, the data shows that 40% of taxpayers above 60 reported capital gains in AY 2026-27.

This was higher than the 35% recorded among taxpayers in the 40-50 age group.

The numbers suggest that many older Indians continue to remain invested in financial markets, even after their regular employment income starts declining. Their investments and accumulated savings continue to play an important role in their financial lives.

Meanwhile, as people explore different ways to earn and invest, filing income tax returns is becoming more complicated.

The data shows that the share of ITR-3 filings increased from 20.6% in AY 2025-26 to 28.4% in AY 2026-27.

Investing in shares, mutual funds and other financial assets can bring capital gains or losses, which taxpayers need to report correctly while filing their returns. Those earning from business, freelancing or professional activities may also have additional reporting requirements.

The data also highlights the risks involved in market participation. Among self-filers below 25 who reported capital gains or losses, 37% reported a loss. The corresponding share among taxpayers above 60 was 21%.

This shows that greater participation in financial markets does not always translate into profits. Investors also need to understand the tax rules around their investments, including how gains and losses should be reported.

India's wealth creation story is therefore changing. A monthly salary is no longer the only source of financial security for many households. Investments, independent work and multiple income streams are becoming an increasingly important part of how Indians earn, save and build wealth.- Ends