India, March 3 -- In a worrying sign for the economy, the number of people earning up to Rs.50 lakh, mostly from salaries, shrank in FY20 even before Covid caused a recession, income tax return filing data so far this year showed.

For those filing returns for FY20 in form ITR-1-people with income from salaries, one house property and farm income up to Rs.5,000-the last date for filing was January 10, 2021. Data available till January end showed this class of tax filers, the biggest chunk of all tax filers, shrank 6.6% from a year ago.

The shrinkage in this category also mirrors a 6.5% contraction in overall returns filed till January-end by all classes of taxpayers, including companies, for income earned in FY20. But in their case, the ...