Per capita income rising, zero tax liability declining: Charts show ascent of middle income class – Times of India
According to an SBI Research report, India’s per capita income is expected to rise from Rs 2 lakh in FY23 to Rs 14.9 lakh in FY47.
The report also said that 25% of income tax returns filers are expected to leave the lowest income strata by FY47, against 13.6% leaving the lowest income strata between AY12-AY23.
ITR filing continues to increase
The report said that the total number of income tax returns filed during AY23 increased to 78 million from 73 million in AY22.
Notably, the share of returns filed after the due date has also declined from a high of 60% in AY20 to merely 25% in AY23.
It further estimated that the share of IT returns filed after due date may drop to around 20% in FY24.
Drop in zero-tax liability filers
The SBI Research report found that there has been a significant drop in those filing zero tax liability. It refers to individuals whose taxable incomes are below the slabs defined by the government.
The report said that their share in total returns filed has declined to 64% in AY23 from 84.1% in AY12.
It said that this, juxtaposed with the buoyancy in tax fling numbers witnessed in recent years, could help policy makers in formulating next level measures as the economy gears up to take the “leap of faith”.
Most taxes filed from Maharashtra, UP
Analysising the state-wise performance vis-a-vis tax filing, the report said that Maharashtra, Uttar Pradesh, Gujarat, Rajasthan and West Bengal were the top 5 states when it came to the number of ITRs filed in AY23.
“Overall, there have been 64 lakh more ITRs filed in AY23 over AY22, with the maximum increase registered in Maharashtra followed by Uttar Pradesh, Punjab, Gujarat and Rajasthan,” the report said.
However, the report added that the data should also be seen in terms of migration from states as the ITR filing is linked with PAN card address, but for many people, the place of working is different from place of domicile.
Migration, an example of cooperative federalism
The report said that as many as six states (Delhi, Tamil Nadu, Kerala, Gujarat, Karnataka and Maharashtra) have net positive migration.
A positive net migration rate indicates that there are more people entering the state than leaving it.
Notably, the increase in state’s GSDP in 6 net positive migration states (7.8% of GSDP) is almost equal to the decline in GSDP in 8 net negative migration states (7.7% of GSDP).
The report added that among the top six states where most ITRs were filed in AY23, three states exhibited net positive migration and three (UP, Rajasthan and West Bengal) exhibited net negative migration.
The road ahead
The SBI Research reported calculated that the weighted mean income in India has increased to Rs 13 lakh in AY23 from Rs 4.4 lakh in AY14.
“One of the major reasons is transition from lower income group to upper income group. Other reason is buoyancy in the number of tax-filers who were earlier not reporting income,” it said.
The report also projected that the weighted mean income is expected to increase from Rs 13 lakhs currently to Rs 49.7 lakhs in 2047, particularly due to increase in number of tax-filers.
The report projected that the Indian population is expected to increase to 1610 million in FY47 from 1400 million in FY23.
Correspondingly, the workforce is expected to increase to 725 million in FY47 from 530 million in FY23, increasing the workforce share in population from 37.9% in FY23 to 45% in FY47.
“Workforce with taxable base is expected to increase to 565 million in FY47 from 313 million in FY23, increasing its share from 59.1% in FY23 to 78% in FY47,” it said.
