Only 4 out of 1000 Indians pay income tax
Budget and Income tax:Nowadays there is talk that the Finance Minister may cut income tax rates or increase tax slabs in the budget. If this happens it will be a good step. Only a very small proportion of Indians actually pay taxes. So will the government have to take care of them too? In fact, it is wrong to estimate that only a small section of Indians pay taxes. The truth is that most people have to pay taxes in some way or the other. Data from the Comptroller General of Accounts shows that the gross tax revenue earned by the central government in 2023-24 was Rs 34.6 trillion.
Overall in India, there are only about 62 lakh individual taxpayers who have paid Rs 4.9 trillion or more than 86 per cent of the income tax paid by individuals. World Bank data also shows that India’s population in the year 2022 was 1.42 billion, out of which only 62 lakh people or about 0.4 percent of the total population paid individual income tax. This means that only about four out of 1,000 Indians pay a large share of income tax. Well, there are a large number of such rich people in India, who have all the facilities, even cars, but they do not pay income tax.
55 percent revenue to the country from company and personal income tax
Direct and indirect taxes account for only 44.5 percent of the gross tax revenue. Personal income tax and corporate income tax make up the remaining more than 55 percent. This means that about 55 percent of the government’s income comes through taxes on the income of people and companies.
Notably, personal income tax constituted about 29 per cent of the gross tax revenue in 2023-24, but this does not mean that a major part of the tax collected by the government is paid by those who do not. Those who pay personal income tax. Most of the revenue comes from income tax on companies.
What is gross tax revenue?
It is basically the money earned by the central government through various taxes. This also includes personal income tax, which you and I pay. Corporates or corporations also pay income tax. Then there is the Goods and Services Tax (GST), which is paid by both corporates and individuals.
Customs duties, which consist mainly of money earned through taxes on imports. There is central excise duty, which the government earns on the production of goods and sometimes also on their sale. A major portion of the gross tax revenue is earned through these taxes.
In the year 2023-24, the central government earned Rs 34.6 trillion through various taxes, out of which only Rs 10.1 trillion was earned from personal income tax. Income tax accounts for slightly more than 29 percent of gross tax revenue. Additionally, the government earned Rs 9.1 trillion, or a little more than 26 percent of gross tax revenue, from income taxes paid by corporates. The remaining Rs 15.4 trillion, or 44.5 percent of gross tax revenue, was earned mainly through GST, excise and customs duties.
Overall, these taxes are called indirect taxes. These are charged on the price of a product or service being sold, as the idea behind any business is to make a profit. Hence the end customer purchasing any product or service ultimately pays these indirect taxes, although, he may not realize it much.
Who pays the most taxes?
Income Tax Department data released in September 2023 shows that in assessment year 2022-23, i.e. financial year 2021-22, around 685 lakh individual income tax returns were filed. Of these, 421 lakh or 61.5 percent return filers had not paid any tax. Another 202 lakh or 29.5 per cent of tax return filers had paid income tax of up to Rs 1,50,000. On average, they paid a little more than Rs 38,959 in tax. Overall, the amount was about Rs 78,726 crore or 13.8 per cent of the Rs 5.7 trillion income tax paid by individual income tax payers on income earned during the financial year 2021-22.
