chibet CricketWhy number of income tax payers halved in just one year

As PM Narendra Modi told the Times Now Summit on Wednesday, only 1.5 crore (1.46 crore, to be precise) Indians pay income tax. That is just a little over 1% of India’s population and only 1.6% of the country’s adult (over 20 years) population.What’s even more striking is that the number of taxpayers has shrunk sharply in the past one year. Estimates show that in the assessment year 2018-19 (financial year 2017-18), 3.29 crore Indians paid income tax. Compared to that, 1.46 crore taxpayers in 2019-20 represent a fall of 55% in just one year.In fact, TOI noticed this precipitous fall the day after this year’s Budget when in an interview to the paper, the revenue secretary said, “In a country of around 130 crore, only around 1.5 crore pay taxes”. The day before, in our Budget edition, we had carried a graphic (headlined “The Deceptive Rise In India’s Income Tax Base”), based on official data, which put the number of taxpayers in 2018-19 at 3.3 crore. medium74129849So where did 1.83 crore taxpayers disappear in a year? The answer lies in the rebate offered to people with annual taxable income between Rs 2.5 lakh and Rs 5 lakh in the interim budget of 2019-20 presented on February 1, 2019. The rebate ensured that income earners in this bracket don’t pay tax any more, though they do have to file tax returns. Early estimates by the tax department show 1.8 crore Indians saw their tax liability falling to zero with this one measure.Data accessed by TOI shows that over 5.7 crore returns had been filed until the end of December, of which close to 4.3 crore individuals showed taxable income of up to Rs 5 lakh. These are income earners who file tax returns, but show zero tax liability. In 2018-19, there were 2.2 crore such ‘zero tax filers’.The data up to December also shows that the number of taxpayers with gross income of over Rs 5 lakh has risen by a little under 4% in 2019-20 —from 1.43 crore in the previous year to 1.49 crore.Tendency to evade tax higher among non-salaried: IT departmentThe fall in the total number of taxpayers underlines the need to widen the base as many non-salaried individuals conceal their income or under-report it, putting a disproportionate burden on those who do pay tax. The Budget speech of 2018-19 had noted that on an average a salary earner pays three times more income tax than a non-salaried taxpayer (Rs 76,306 versus Rs 25,753). medium74129894The tax department believes the tendency to evade tax is higher among the nonsalaried. It expects to bring in more individuals in these segments into the tax net with measures like tax collection at source on overseas remittances and purchase of vehicles of over Rs 10 lakh introduced this year.Already, the December tax filings data show that the growth rate of income taxpayers in income brackets of over Rs 10 lakh is much higher than those with income of less than Rs 10 lakh.A series of tweets by the IT department on Thursday revealed that there were 8,600 individuals declaring over Rs 5 crore taxable income and about 3.2 lakh who declared taxable incomes of over Rs 50 lakh.