Gen Z Drives Record 600% Jump in ITR-3 Filings As Young Investors Bet Big on Markets

With the due date of filing income tax return (ITR) for assessment year (AY 2025-26) closing in a few hours from now, there is a rush among taxpayers to file their returns on time to avoid penalty.

However, there is another set of data from last year’s tax filing (AY 2024-25) that shows how the younger generation (Gen Z) is taking a keen interest in the market, and which is expected to continue this year as well, as when the tax filing data is released after the ITR filing process for AY 2025-26 officially concludes.

According to Cleartax, an income tax filing portal, ITR filings under ITR-3, typically linked to business income and capital market activity, rose more than 600 per cent among investors under the age of 25 in 2024 (AY 2024-25).

This rise is happening at a time when the country is witnessing a growing capital market participation from investors, both young and experienced. Around 37 million new demat accounts were added in the financial year 2023-24, according to the data.

Early indication shows that FY 2024-25 (AY 2025-26) is also on track to continue this momentum. But the most striking fact is that much of this activity is being fuelled by Gen Z investors, such as college students and young professionals, who are entering the markets earlier than the previous generation.

“These are not just passive dabblers. Many are committing serious capital right at the start of their financial journey. The enthusiasm is incredible, but it comes with risk, as this group is still learning to navigate volatility,” said Archit Gupta, founder and CEO of Cleartax, in a column.

The data from Cleartax shows that while sub-25 ITR-3 filers are leading the growth charts, they also recorded some of the steepest losses. The millennial group (those between 30-35 age group) showed steady increase and far few losses, which is a proof of their experience, discipline and risk control, according to the ITR filings.

Typically, investors in their late 30s and 40s shift towards safer, income-preserving options – an indication of how financial behaviours evolve with different life stages.

However, the notable factor is that early participation appears to be sticking. Cleartax noted that ITR-3 filers had the highest retention rate, 91.60 percent in 2024. The data showed a 68 per cent retention rate by August 2025 and 58 per cent year-on-year (y-o-y) growth in new users.

In short, once Gen Z investors enter the markets, they rarely step out, but further need the right guidance.

Last Date to File ITR Is Today For AY 2025-26

The surge in ITR-3 filings also coincides with a crucial deadline. The ITR due date for AY 2025–26 is September 15, 2025, which means today is the last chance for taxpayers to file without facing any penalty later.

If you miss the deadline, a late fee of Rs 5,000 applies if your income exceeds Rs 5 lakh, and Rs 1,000 for lower incomes (u/s 234F). Belated returns can be filed until December 31, 2025.

Also, taxpayers should make sure to e-verify their ITR within 30 days of filing to validate the same. This step is crucial to ensure one gets the refund in time. One can e-verify immediately after filing the ITR using Aadhaar OTP, Netbanking, or Demat account.

The Bottom Line

The data shows that India’s capital market boom has a very different face from a decade ago. It is young, ambitious, and digital-first, with Gen Z taxpayers not just investing, but also reporting their capital market income through ITR-3 filings.

The challenge now, as Gupta noted, is ensuring that this new energy is channelled into sustainable wealth-building, while also meeting the tax deadlines on time.