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Budget 2020: The deceptive rise in India’s income tax base

The government has been able to make more people file tax returns by applying spending filters (e.g. annual electricity bill, foreign travel), but a huge chunk of these ‘high spenders’ do not draw salary incomes and are getting away by declaring non-taxable income.

Last Updated: Feb 02, 2020, 02.11 PM IST
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Even among the 2.5% Indians who pay income tax, there is huge inequality. Less than 4% of taxpayers pay 60% of the tax income.
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In 16 years between 2002-03 and 2018-19, the number of individuals who filed tax returns grew 62%, but the number of people who paid income tax rose by only 22%. The government’s attempt to bring more people into the tax administration’s net has been successful, but a rising percentage of those filing returns are able to prove they have no taxable income.

No. of tax returns: 3.4 crore
No. of taxpayers: 2.7 crore
Those who filed returns paid tax: 80%

In 2002-03, 4.4% of Indians aged 20 and more paid income tax, in 2018-19 this reduced to 3.8%.

No. of tax returns: 5.5 crore
No. of taxpayers: 3.3 crore
Those who filed returns paid tax: 60%

Percentage of population filing tax returns went up from 3.2 in 2002-03 to 4.18 in 2018-19.

Increase in 16 years:
Tax return filers: 62%
Taxpayers: 22%


A shrinking taxpayer base puts excessive burden on salary earners who, on average, pay 3 times more income tax than non-salaried taxpayers.

Source: Income Tax Department, NSSO

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