Gen Z and Millennials Drive India's Multi-Income Tax Filing Revolution in 2025
ClearTax's 2025 filing data reveals a generational transformation in India's tax landscape, with Gen Z and millennials leading a 45.4% surge in ITR-3 filings for business income and 17% growth in ITR-2 investment filings. Millennials dominate with 42.3% of business income returns, while Gen Z shows 18% growth in investment filings, indicating early market participation and sophisticated multi-income portfolios including digital assets.
*this image is generated using AI for illustrative purposes only.
India's income tax filing patterns reveal a generational shift toward diversified income sources, with younger taxpayers leading a transformation from traditional salary-based returns to complex multi-income filings. ClearTax's comprehensive "How India Filed in 2025" report demonstrates that Gen Z and millennials are fundamentally changing how Indians earn, invest, and participate in financial markets.
Surge in Business and Investment-Related Filings
The filing data shows substantial growth across different income categories, with business and investment-related returns demonstrating exceptional momentum driven primarily by younger demographics.
| Filing Type | Growth Rate | Key Insight |
|---|---|---|
| ITR-3 Filings | +45.4% | Business and trading income |
| ITR-2 Filings | +17% | Capital gains and investment income |
| ITR-3 with Capital Gains | 80% | Combined business and investment income |
This growth pattern indicates that tax returns now capture a broader spectrum of earnings beyond conventional salary structures, with younger taxpayers at the forefront of this diversification trend.
Millennials Dominate Multi-Income Landscape
The 25-35 age demographic emerges as the primary catalyst for India's income diversification revolution. Millennials account for 42.3% of all ITR-3 filings, representing the largest share of taxpayers reporting business or trading income. This generation also constitutes the majority of both new and returning trading taxpayers, demonstrating active participation in market-linked income generation alongside traditional employment.
The data reveals that millennials are deliberately combining salaries with business activities, trading income, and investment returns, creating sophisticated financial portfolios that require complex tax filings.
Gen Z Embraces Early Investment Culture
India's youngest taxpayers are entering the formal tax system with investment exposure at unprecedented levels. Among filers under 25 years, ITR-2 filings grew 18%, indicating that first-time tax returns increasingly capture investment income alongside salaries, stipends, or internship earnings.
This trend suggests Gen Z taxpayers are participating in financial markets earlier than previous generations, with their initial tax filings reflecting diversified income sources rather than single-stream salary returns.
Digital Assets Integration Among Young Investors
Virtual Digital Asset (VDA) filings provide insights into cryptocurrency adoption patterns among younger demographics. Nearly 40% of VDA filers fall within the 25-35 age group, with approximately half also filing ITR-3 returns. This overlap indicates that crypto investments are integrated into broader financial portfolios including business and trading activities, rather than representing isolated speculative investments.
The report characterizes these participants as deliberate, high-risk traders rather than casual cryptocurrency enthusiasts, reflecting sophisticated investment approaches among younger taxpayers.
Peak Earning Patterns Across Age Groups
While younger cohorts focus on income diversification and market participation, traditional peak earning patterns remain evident among older demographics. Salaried taxpayers aged 40-50 years demonstrate the highest income levels, with 38.1% reporting annual incomes exceeding ₹30.00 lakh, marking this decade as the prime earning phase for India's traditional workforce.
Commenting on the findings, Archit Gupta, Founder & CEO of Clear, stated: "The surge in multi-income filers shows that Indians are combining salary with capital gains, trading, and business income. Younger taxpayers are entering the system with investing behaviour previously seen only among seasoned investors."
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