It’s March and end of financial year again. It’s that taxing time of the year. So why don’t you know about the tax payers in India and how much they pay.

According to Google, the population of India is 1,241,491,960 (2011 data). In short we can say 120+ crore people lives in India. India’s per capita income (nominal) is $ 1219 (Rs.63338), ranked 142nd in the world whereas per capita income of USA is $ 42000. So what is this per capita income? It’s the total national income divided by the number of people in the nation. That is India’s national income is Rs.63338. It’s way below than the other countries smaller than India.

Poverty in India is widespread, with the nation estimated to have a third of the world’s poor. In 2010, World Bank stated, 32.7% of the total Indian people fall below the international poverty line of US$ 1.25 per day (PPP) while 68.7% live on less than US$ 2 per day.

So by now you might have got some idea of the current state of India and its tax payers.

Do you know how many Indians pay taxes and how much?

By this time you would not be surprised with some of the numbers. But its below your expectations. According to the report released by Ministry of Finance (Standing Committee on Finance (2011-12), Fifteenth Lok Sabha),  estimated number of taxpayers for financial year 2011-12 stands at just 3.24 Crore people. That means less than 3 people in 100 pay taxes.

Out of these 3.25 Crore people, 89% pay taxes in the tax slab of 0 – 5 Lakh rupees, while on the other end of spectrum, only 1.3% of all tax payers have income about 20 Lakh!

Details of number of income tax payers in the tax slabs of Rs. 0-5 lakh, Rs. 5-10 lakh, Rs. 10-20 lakh and beyond Rs. 20 lakh, as furnished by the Ministry in their written submission are given as under:

Estimated number of taxpayers (FY 2011-12)

Slab

Number (in lakhs)

Percentage of taxpayers

0-5 lakh

288.44

89.00%

5-10 lakh

17.88

5.50%

10-20 lakh

13.78

4.30%

>20 lakh

4.06

1.30%

324.16

100%

So it’s clear from the graph that only 1.3% of Indian population earns above 20 Lakh per year and 89% earn below 5 Lakh per year.

Similarly, the details regarding amount of tax collected under the existing rates and percentage of tax collected in each of the said slabs as furnished by the Ministry are given as under :

Estimation of tax collection in each slab (FY 2011-12)

Slab

(Rs. in crores)

Percentage of tax collected

0-5 lakh

15,010

10.10%

5-10 lakh

21,976

14.80%

10-20 lakh

17,858

12.10%

>20 lakh

93,229

63.00%

1,48,073

100%

Although, only 1.3% of all tax-payers earn more than 20 lakhs in India, they account for a whopping 63% of all the taxes collected by Indian Government. So 4.6 Lakh Indians pay a total of 93,229 crore rupees of tax. That comes to an average of roughly 23 Lakh per person!

The new tax slabs are as follows:

Up to Rs 2 Lakh: No tax

From Rs 2 Lakh to 5 Lakh: 10%

From Rs 5 Lakh to 10 Lakh: 20%

Above Rs 10 Lakh: 30%

The Ministry further added that:

―The proposed exemption limit of Rs.2 lakhs in the DTC is four times the per capita income.  It ensure that an individual earning Up-to four times the per capita income is not subject to tax.  Further, deductions have also been provided for interest on a loan for acquiring a house, for medical expenditure, expenditure on education are also allowed before the exemption limit is applied. Further, deduction for long-term savings is also allowed before computing the income subject to tax.  This ensures that an overwhelming majority of citizens are not subject to direct tax on their income.  Only 3 to 4 per cent of the population whose income is higher than that of the “aam admi” is therefore subject to direct tax.  Raising the exemption limit will erode the tax base substantially!!

So the above statistics only show the brake up of different ways of compiling and presenting data. We cannot draw a conclusion from the graphs as to how much tax is evaded by above 20 Lakh slab group. In fact there is a lot of scope to collect tax from each group. If each person has started to pay the income tax regularly, from the tax collection itself we will improve our GDP. And of course if we can get back the black money too, we will be the number one economy in the world. I am sure if proper utilization of power and governance is implemented, India will be shining by 2020.

So pay tax. If everyone starts paying without any misuse, the tax to be paid by each individual will be less!