How much tax do Indians pay?
Most salaried people pay taxes via TDS (Tax Deduction at Source) and file refund claims through the returns filing in July of every year. In the recent past, a lot has improved in this arena with the introduction of online e-Filing of returns and processing of refund claims through CPC (Central Processing Cell) in Bangalore. Although most people that fall under the formal sector of employment pay taxes on the salaries they earn, people in informal sector pay taxes on their income from a variety of sources such as income from house property, business/profession income, capital gains from real assets and financial assets and interest income(s).
Who makes up the Indian workforce?
What is the tax revenue collected by the government?
Who makes up the Indian workforce?
- Total worforce in India: 487 million (~40% of population)
- Informal Sector: 453 million (93% of workforce)
- Formal sector: 34 million (7% of workforce)
- Government employees: 21 million (61% of formal workforce)
- Non-Gov employees: 14 million (39% of formal workforce)
- IT/ITES/BPO employees: 3.5 million
- Other private sector employees: 9.5 million
What is the tax revenue collected by the government?
- Total tax payers in the country: 36 million people (3% of the population)
- Taxes collected from individuals Income: Rs.1.95 Lac crores
- Taxes collected from Corporations/Companies: Rs.3.73 Lac crores
- Total Tax collected: Rs.10.77 Lac crores (includes union excise, customs & service tax, Budget 2012-13)
On a comparison scale, 45% of the population in US pays tax - well you could argue that they run a fiscal deficit of 4.7% as well, very similar to India, but the critical difference is US has many creditors willing to fund their deficit at a very low interest rate (1-2%). This is in sharp contrast to India's fiscal deficit situation as it is not only difficult to find creditors but they also come at a high cost of debt (>8%).
As with family budgets, the Indian government comes up with an annual budget in February of every year. And for a developing country like India, expenditures are always higher than income, leading to budget deficits year over year. While so much tax revenue is collected, makes one wonder where does all the tax money go - the next article provides an analysis of this topic.
As with family budgets, the Indian government comes up with an annual budget in February of every year. And for a developing country like India, expenditures are always higher than income, leading to budget deficits year over year. While so much tax revenue is collected, makes one wonder where does all the tax money go - the next article provides an analysis of this topic.
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