Just about a fourth of India’s gross national income (GNI) came under the purview of direct taxation in 2011-12. According to latest updated direct tax returns data released by the Central Board of Direct Taxes (CBDT), gross total income of all taxpayers stood at Rs 21.17 lakh crore in 2011-12 as against the country’s GNI of Rs 89.3 lakh crore (2004-05 GDP series) in the same year.
The tax returns data, however, does not reflect the number of agricultural income and the informal sector’s daily wage income earners. At present, agricultural income is only used for determination of tax rate for an individual while computing the tax liability, which is later deducted from the total tax as agricultural income is exempt from tax. Also, around 1.53 crore taxpayers paid taxes in assessment year 2012-13 but did not file returns.
The skewed nature of the country’s tax collections is further reflected in the taxes paid by companies. In the tax segment of over Rs 500 crore, only 58 companies paid tax of Rs 89,280 crore, accounting for only 40.3 per cent of total tax paid by companies in 2011-12. In fact, the tax of Rs 89,280 crore paid by 58 companies in the highest tax bracket of Rs 500 crore and above was only around Rs 2,500 crore more than the total tax paid by previous four segments of taxes ranging between Rs 10 crore to Rs 500 crore.
Of the total 5.81 lakh returns filed by companies, about 50 per cent paid zero taxes during the year 2011-12. Companies filed the maximum number of returns of 159,646 in the tax segment of less than Rs 1.5 lakh crore. The total tax paid by companies for this tax segment was Rs 577 crore. Similarly, for individual category, only three individuals filed tax returns for gross total income above Rs 500 crore in financial year 2011-12. For individuals having tax liability over Rs 50 crore, only 11 individuals paid taxes of Rs 1,027 crore, accounting for just 0.9 per cent of the total tax paid by individuals during the year 2011-12.
Super rich earning between Rs 10-25 crore annually were 146 in assessment year 2012-13, those with salary between Rs 25-50 crore were 23 and those between Rs 50-100 crore were only six in number. There were over 37.35 lakh individuals who had annual salary income up to Rs 2.50 lakh. As per the I-T Act, people earning below Rs 2.5 lakh per annum are exempt from paying taxes. Those with income between Rs 2.5 lakh to Rs 5 lakh pay a 10 per cent tax while Rs 5 lakh to Rs 10 lakh give 20 per cent tax. People with income above Rs 10 lakh pay 30 per cent tax.
In 2016-17 Budget, government had increased the surcharge on the super-rich having an annual income of over Rs 1 crore from 12 per cent to 15 per cent. The data also showed that, over 20.29 lakh salary earners were in the segment of salary income between Rs 5.50-9.50 lakh per annum.
With average salary coming in at Rs 6.94 lakh, these individuals cumulatively earned a salary income of over Rs 1.40 lakh crore. Over 19.31 lakh individuals had annual salary income between Rs 2.50-3.50 lakh, while over 8.10 lakh individuals earned a salary between Rs 3.5-4 lakh, as many as 7.57 lakh pocketed between Rs 4-4.50 lakh salary every year. As per the data, over 3.12 crore salary earners filed tax returns in assessment year 2012-13.
The CBDT in April had released data on returns filed for the assessment year (AY) 2012-13 pertaining to previous financial year 2011-12. Now, they released an updated version by eliminating returns having inconsistent data. The revenue department is in the process of finalising detailed returns data for AY2013-14 and subsequent years.