‘Super-rich’ incomes’ share ebbing amid middle-class mobility: CBDT
Context
The Central Board of Direct Taxes (CBDT) said on Thursday that India’s tax base has widened sharply since 2013-14, with individuals moving up the income ladder and the proportion of super-rich taxpayers’ incomes declining. This comes days after Congress cited income tax data to show widening income inequality in the country.
What are the key points that can be interpreted from the income tax data?
- Increase in Tax Returns: From 2013-14 to 2021-22, the number of income tax returns submitted by individuals increased from 3.36 crore to 6.37 crore.
- Positive income Migration: The data reveals that individuals are rising the economic ladder in a positive trend. Individual taxpayers filing returns in higher income levels, such as 5 lahks to 10 lahks and 10 lahks to 25 lahks, for example, grew significantly, showing that individual taxpayers are moving into higher income categories.
- The proportion of Top Earners: The top 1% of individual taxpayers’ proportionate contribution to the gross total income of all individual taxpayers fell somewhat, from 15.9% to 14.6%. This shows a slight drop in income concentration among the super-rich.
- Income Distribution: The share of gross total income earned by the bottom 25% of taxpayers increased somewhat from 8.3% to 8.4%. Individual taxpayers in the middle 74% saw their percentage of gross total income rise from 75.8% to 77% during the same time.
- Average Gross Total Income: Over nine years, the average gross total income for individual taxpayers increased by 56%, from approximately 4.5 lakh to around 7 lakh. Notably, the least 25% of individual taxpayers had their average income increase by 58%, while the richest 1% experienced a 42% gain.
- Impact on Tax Revenues: Increases in individuals’ gross total income across income levels have resulted in higher net direct tax revenues. These revenues have increased from 6.38 lakh crore in 2013-14 to 16.61 lakh crore in 2022-23, demonstrating a strong increase in tax revenue.
Conclusion
Overall, the data indicates that more Indians are raising the income ladder, and the tax base has grown dramatically. While income mobility is improving, the concentration of income among the top 1% has reduced little. Tax collections are increasing, indicating a positive economic trend. This information is in response to recent conversations in the country regarding income inequality, and it provides a more nuanced view of income distribution.
