TOI Budget 2018 special: Income tax payers in India are minuscule

NEW DELHI: Last year, tax payers rejoiced when finance minister Arun Jaitley announced a reduction in tax rate in the

income tax slab

of Rs 2.5 lakh to Rs 5 lakh to 5 per cent from 10 per cent in his budget speech. Therefore, it’s natural, people will hope for a similar or better announcement in budget 2018. He may or may not, but an in-depth look into the number of Indians paying taxes throw ups some surprising facts.

According to data from the

Central Board of Direct Taxes

(CBDT), only 2.05 crore Indians or 1.7 per cent of 120 crore Indians paid taxes in 2015-16. Break that up further and you see that 4.6 per cent of total taxpayers paid a whopping 62.34 per cent taxes collected, while 89.86 per cent paid just 23.73 per cent of total taxes. The remaining 5.5 per cent paid 13.92 per cent of taxes.

If around 11 per cent of taxpayers pay a gargantuan 76.26 per cent of taxes, it is because they earn disproportionate share of income. Tax payers with a declared income between Rs 1 and Rs 2.5 lakh make a whopping 93.3 per cent of total tax payers in India.

Despite the fact that India added more tax payers in 2015-16, up from 1.91 crore tax payers in 2014-15, it didn’t register an increase in tax revenue. In fact, the tax collected in 2015-16 was to the tune of 1.88 lakh crore, lower than the Rs 1.91 lakh crore collected in 2014-15.


Big question: Why do only 1.7 per cent of Indians pay taxes?
The answer lies in the fact that 90 per cent of Indians don’t fall in the tax bracket as they earn less than Rs 2.5 lakh a year, and hence are exempt from paying income tax.

Plus, there are several categories of income earners who don’t have to pay tax even if their annual income is more than Rs 2.5 lakh. These include farmers and some categories of non-salaried professionals who and pay lower taxes.








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