Behind Tax numbers..

Highlights of 2017 budget on Personal Taxation

1. Reduce the tax rate of the lowest income slab (Rs.2.5-5Lac) from 10% to 5%
2. IT rebate reduced from Rs.5k to Rs.2.5k & applies only for Income upto Rs.3.5Lacs
3. Levy a 10% surcharge on those earning Rs.50L - 1Crore income
4. Reduce the holding period from 3 to 2 years for real estate assets to qualify as long term
5. Revealed the amount gathered under the demonetization scheme (Rs.10.4Tn)

Direct Tax collection
Based on the latest data published by the Income Tax (IT) department for AY2014-15, 3.91 crore returns were filed and a total of Rs.4.46Lac Cr (Rs.4.46Tn) in direct taxes collected. Key stats:

• Total returns filed: 3.91 crores
• Returns from Individuals: 3.65 crores (93%)
• Total tax paid by Individuals: Rs.1.91 Lac crore / Rs.1.91Trillion / $29bn
• 26 Lac returns filed by companies & firms
• Total tax paid by Companies: Rs.2.55 Lac crore / Rs.2.55Trillion / $39 bn

The top 1.5% Tax payers
The stats revealed that 47.5% (1.74 crore) assesses filed Zero income returns, another 47% (1.71 crore) assessees paid 20% (Rs.44k crore) of total individuals' taxes and just 6% (20 Lac) assessees paid 80% (Rs.1.5Lac crore) of Individuals' taxes.
                                         No.of Returns   Sum of Tax  Avg Tax paid  Tax weightage
                                                                    (In crore)      (in Lac)
0 Income (refund cases)     17415475           0                  0                     0.00%
(a) 0 to 1.5 Lacs                 17179474         43964             0.26                22.99%
(b) 1.5 – 5 Lacs                  1364972           37308            19.65               19.51%
               
(c) 5 – 20 Lacs                    470256             41511            51.42               21.71%
(d) 20-50 Lacs                     58925               17620           56.9                 9.22%
(e) 50Lacs – 1 Crore            16432               11135           67.76               5.82%
(f) 1 – 25 Crores                  7465                 16027           2295.41           8.38%
(g) 25-100 Crores                31                     1226             9716.78           0.64%
(h) Over 100 crores              4                      22417           2205270          11.72%
Sum Total                                                  36513034         191208         2217479.09   

Segments (a) & (b), the middle class, totals 1.85 crore assesses (51% of returns filed). They contributed 42% of the total tax revenue (Rs.81k crore).
Segments (c) to (h), the upper middle class, affluent, HNI & UHNIs, totals just 5.53Lac assesses (1.51% of returns filed). This segment contributed 58% of the total tax revenue (Rs.1.09Tn) / $16.5bn

Missing tax payers?

Comparing the tax data from IT department against wealth statistics reveals that the top 1% wealthy people (1.1 crore people) owns 49% of the country's wealth. However, only 5.5Lac people are filing IT returns - where are the missing 1.05 crore assesses? Coming up in next blog!