SAN FRANCISCO (Diya TV) — For the first time since the year 2000, India has published the country’s tax income data, and the numbers are shocking.
About 12.5 million Indians — or 1% of the total population — paid tax on their earnings in 2013. Despite nearly 30 million tax returns being filed that year, 16 million of those got off scot-free without paying any taxes, according to the data.
The total tax paid during fiscal year 2013 was Rs1.14 lakh crore ($17 billion), according to the income tax department. Two years later, this had increased to Rs2.65 lakh crore. The number represents just about 2.4 percent of India’s gross domestic product.
Essentially, all of this data means two things: the richest of Indians aren’t paying enough taxes, and the number of salaried workers is still low.
The low tax collection only makes more difficult the job of Prime Minister Narendra Modi, which has sought to increase the share of direct taxes in revenue and eliminate black money — undisclosed foreign assets. India represents Asia’s third largest economy, and needs the tax money in order to properly execute spending on its ambitious infrastructure and public service plans.
Here is how the personal tax income for the government has increased over the years:
How much did India make from taxes in 2015:
Experts and economists alike weren’t surprised by the low figures. In 2014, India’s per capita income was $1,631, according to the World Bank.
“The statistics are actually in line with the per capita income of India. It also means most employees in the organised sectors are earning below the limit that is taxable,” said Chitra Jayasimha, practice leader and lead actuary, retirement planning at Aon Hewitt.
Experts also believe that India’s tax net should be widened, thanks in part to a long history of non-tax paying citizens. In 2012, then finance minister P. Chidambaram had said that less than 3% of Indians file income tax returns.
More than 50 percent of the nation’s residents work in agriculture and allied activities — agriculture income is exempted from tax in the country.
“With such a large population engaged in agriculture and a huge gap between the rich and the poor, the number of taxpayers as a percentage is likely to be low. But these numbers are of concern—are those who needed to pay taxes actually paying, or, are those paying the taxes actually paying the right amount?” explained Kuldip Kumar, leader, personal tax at Price Waterhouse India.
Another large reason of poor tax collection in the country is because most of the labor is in the country’s unorganized sector. While this accounts for less than 10 percent of the population, these workers are paid in cash, and are part of an informal economy.
India’s decision to publish these tax records only comes after years of critique and ridicule from the world’s international economists and experts. Thomas Piketty, the French economist, said in January that there is “extreme lack” of data in India, especially income tax.
“Our govt. has taken the landmark decision of publishing the income tax data. It is a big step towards transparency & informed policy making,” Modi tweeted on April 29.
