Tax base widens, trend of migration of individuals towards higher income: CBDT

“This indicates that individual taxpayers are showing a positive trend of migration to a higher range of gross total income,” it said. The Department, however, clarified that the range of gross total income upto Rs 5 lakh includes individuals having income below taxable limit who may not be filing returns.

The CBDT statement comes days after Congress had questioned the widening gap between the ultra-rich and the middle class. In a post dated October 23 on social media platform X, formerly Twitter, Congress leader Jairam Ramesh had said analysis of tax data between 2013-14 to 2021-22 points towards increasing income inequalities. “The top 1 per cent of income tax payers made 17 per cent of all income in 2013-14. By 2021-22, the top 1 per cent made 23 per cent of all income. Further, the income growth of the ultra-rich was much faster than for the middle class. The top 1 per cent of income tax payers saw their income grow at 13 per cent year-on-year from 2013-14 to 2021-22 — a massive 60 per cent faster than the income of the lowest 25 per cent of taxpayers,” he said.

The CBDT in its statement said the “proportionate contribution of gross total income of top 1 per cent individual taxpayers vis-à-vis all individual taxpayers has decreased from 15.9 per cent in AY 2013-14 to 14.6 per cent in AY 2021-22”. Also, the proportionate contribution of gross total income of bottom 25 per cent individual taxpayers vis-à-vis all individual taxpayers has increased from 8.3 per cent in AY 2013-14 to 8.4 per cent in AY 2021-22, it said.

“The proportion of gross total income of the middle 74 per cent group of individual taxpayers increased from 75.8 per cent to 77 per cent in the above period. The average gross total income for individual taxpayers increased from about Rs 4.5 lakh in AY 2013-14 to about Rs 7 lakh in AY 2021-22 representing an increase of 56 per cent. The increase in average gross total income for top 1 per cent individual taxpayers is 42% while that for bottom 25 per cent individual taxpayers is 58 per cent,” the CBDT said.

In an earlier reply in the Parliament in March, the government had shared data which showed that for a total of 6.94 crore taxpayers in the financial year 2020-21, the year affected by the Covid-19 pandemic, 7.6 per cent or 48.4 lakh individual taxpayers were in the topmost 30 per cent tax slab in the country. In the following fiscal, individual taxpayers in the 30 per cent tax slab increased to 60.81 lakh.

Total number of taxpayers had recorded a loss of 23.25 lakh in the financial year 2019-20, declining to 6.71 crore from 6.94 crore in the previous financial year 2018-19, government data showed. Total number of taxpayers then again increased to around 6.94 crore in 2020-21 but still remained below the pre-pandemic level of 2018-19 by 24,645 taxpayers. The overall number of individual taxpayers had also declined in FY 2019-20 to 6.29 crore from 6.54 crore in the previous year. The number of individual taxpayers then picked up pace again in FY 2020-21 to 6.33 crore though it remained below pre-pandemic 2018-19 level by over 20 lakh.