Have you ever wondered where you stand in the Indian economy? Since there is no satisfactory official data on income levels of Indian households, we don’t have a clear answer. But now that the government has released income tax statistics after 15 long years, we have got an inch closer to answering this question – at least for the top earning class.
Less than 3 per cent of Indian adults paid income tax for the financial year 2011-12, new data released by the Income Tax department on Friday show.
If you pay income tax, check our interactive to see how many Indians earn more than you do.
Surprised? Previous data throws some insights, offering a broader picture of how much people earn and spend across the country.
Net income of an individual is the sum total of various income sources – salary, business, property, interest on loans etc. The National Sample Survey Organisation (NSSO), which conducts regular surveys to assist the government in socio-economic planning and policy-making, doesn’t ask direct questions on income because it believes that it is difficult for survey respondents to accurately estimate their income.
However, NSSO does ask the monthly per capita expenditure, which is often used to measure prosperity as a surrogate to income. According to the latest data available for 2011-12, if your monthly spend is around Rs. 3,000 in rural areas and Rs. 6,300 in urban areas, you belong to the top 5 per cent. That translates to an annual spend of Rs. 36,000 and Rs. 75,000 for rural and urban areas respectively.
But India Human Development Survey of 2011-12 (IHDS-II) conducted by the National Council for Applied Economic Research, did ask a nationally representative sample about their incomes. According to IHDS-II, if your annual household income is greater than Rs. 1.6 lakh, you belong to the richest 20 per cent of the country.
Income Quintiles | Annual Income Range (in Rs) |
Poorest Quintile (Poorest 20%) | 1,000 - 33,000 |
2nd Quintile | 33,001 - 55,640 |
3rd Quintile | 55,641 - 88,820 |
4th Quintile | 88,821 - 1,59,600 |
Richest Quintile (Richest 20%) | 1,59,601+ |
Note: Quintile represents 20% of a given population
Data Source: India Human Development Survey, 2011-12
Specifically talking about rural India, which accounts for nearly 70 per cent of the country’s population, the Socio-Economic and Caste Census conducted in 2011 (SECC) found that in around 75 per cent of the rural households, the main earning family member makes less than Rs 5,000 per month or Rs 60,000 annually. Further, in only 8 per cent of rural households does the main earning member make more than Rs. 10,000 per month or Rs. 1.2 lakh annually.
The two surveys and SECC data establish that India is not a rich country. And hence, the fact that a small fraction of Indians pay income tax is not very surprising. However, experts point out that this also indicates that taxes are being evaded and that there might be a difference in ‘actual income’ of an individual compared to ‘declared income’. Also, note that only data for ‘returned income’ – total income minus possible tax deductions– is available. So while this data comes with these caveats, it is the only source which gives us an insight on how wealth is distributed among the richest Indians.
