The Mumbai Income-Tax department has sent out 12 lakh notices, emails and text messages to citizens who are not filing I-T returns. They have been asked to file returns as the department tries to shore up the tax base.

The move comes after the department added only 2.48 lakh new taxpayers from April to December in the last financial year. That rate was much lower than what was needed if the department had to achieve its target of adding 6 lakh new taxpayers in Mumbai in 2015-16.

As the financial capital of the country, Mumbai is the highest contributor of direct taxes — which includes income tax, corporate tax, wealth tax, securities transaction tax and so on.

The I-T department recently released state-wise numbers. Maharashtra accounts for close to 40% of direct tax collections in India, followed by Delhi (13.1%), Karnataka (8.7%) and Tamil Nadu (6.4%).

Overall, direct taxes account for less than 50% of total tax collection in the country — which points to a regressive tax regime (indirect taxes like excise and customs do not differentiate between the rich and poor and everybody pays the same amount).

One way to increase direct tax collection is to increase the tax base — only 2.5% of 120 crore Indians file I-T returns and only 1% pay any income tax at all.