‘Super rich’ incomes’ share ebbing amid middle-class mobility: CBDT

Subject: Economy

Section: National Income

Context:

The Central Board of Direct Taxes (CBDT) released statements on income tax statistics and income inequality in India.

Details:

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.
As many as 7.41 crore I-T returns have been filed so far this year, which include 53 lakh first-time tax filers.
The overall number of income tax (I-T) returns filed by individuals has risen from 3.36 crore to 6.37 crore through assessment years 2013-14 to 2021-22.

Migration to higher range:

There is also an increase in the number of returns filed by individual taxpayers across various ranges of gross total income.
In the range of gross total income up to ₹5 lakh, the number of returns filed by individual taxpayers has increased from 2.62 crore in AY 2013-14 to 3.47 crore in AY 2021-22, registering an increase of 32%.
- This range of income includes individuals having income below taxable limit who may not be filing returns.
For higher income ranges of ₹5 lakh to ₹10 lakh, and ₹10 lakh to ₹25 lakh, the number of individual returns filed surged 295% and 291% individuals over the same period, respectively.
- This indicates that individual taxpayers are showing a positive trend of migration to a higher range of gross total income.

Increase in income of individual:

The average gross total income for individual taxpayers increased from about ₹4.5 lakh to about ₹7 lakh over the nine-year period, representing an increase of 56%.
The increase in average gross total income for top 1% individual taxpayers is 42% while that for bottom 25% individual taxpayers is 58%.
The increase in net direct tax collections has increased from ₹6.38 lakh crore in 2013-14 to ₹16.61 lakh crore in 2022-23.

Decreasing income inequality:

The proportionate contribution of gross total income of top 1% individual taxpayers vis-à-vis all individual taxpayers has decreased from 15.9% to 14.6%, while the share of the bottom 25% taxpayers increased from 8.3% to 8.4% over the same period.
The proportion of gross total income of the middle 74% group of individual taxpayers increased from 75.8% to 77% in the above period.

CBDT:

Under the Ministry of Finance
It is a statutory authority functioning under the Central Board of Revenue Act, 1963. The officials of the Board in their ex-officio capacity also function as a Division of the Ministry dealing with matters relating to levy and collection of direct taxes.
The Board was split up into two, namely the Central Board of Direct Taxes and Central Board of Excise and Customs with effect from 1.1.1964.
It consists of a Chairman and six Members.

Source: TH