Nine-year shift: Taxpayers' income distribution less tilted to super-rich

ITR filing surges 90% during AY13-14 and AY2021-22

The distribution of gross income among individual income taxpayers has become slightly less skewed towards the super-rich over a nine-year period, compared to the bottom and middle groups of taxpayers, reveals data released by the Central Board of Direct Taxes (CBDT).

According to the data, gross total income of the top 1 per cent of individual taxpayers (the super-rich) as a proportion of total income of all individual taxpayers has decreased from 15.9 per cent in Assessment Year (AY) 2013-14 to 14.6 per cent in AY 2021-22.

Conversely, the proportionate contribution of gross income from the bottom 25 per cent and middle 74 per cent of individual taxpayers has moderately increased.

“The average gross total income for individual taxpayers increased by 56 per cent from about Rs 4.5 lakh in AY 2013-14 to about Rs 7 lakh in AY 2021-22. The increase in the average gross total income for the top 1 per cent of individual taxpayers is 42 per cent, while for the bottom 25 per cent of individual taxpayers, it is 58 per cent,” CBDT announced on Thursday when releasing the data.

Additionally, the number of tax filings by individual income taxpayers has surged by 90 per cent to 63.7 million in AY 2021-22 compared to AY 2013-14, thanks to improved compliance.

“During the current financial year as well, 74.1 million returns have been filed for AY 2023-24 to date, including 5.3 million new, first-time filers. This indicates an expansion of the tax base following various reform measures,” the CBDT pointed out.

There is also a positive trend of taxpayers migrating to higher income brackets. The number of taxpayers in the gross total income ranges of Rs 5-10 lakh and Rs 10-25 lakh has increased by a massive 295 per cent and 291 per cent, respectively, over nine years.

Meanwhile, the number of taxpayers within the gross total income range of up to Rs 5 lakh has increased by 32 per cent in AY 2013-14. This range includes individuals with income below the taxable limit who may not file returns.

“As a reflection of the growing base of income taxpayers and their increasing wealth, the net direct collection expanded from Rs 6.38 trillion in FY 2013-14 to Rs 16.61 trillion in FY 2022-23,” noted CBDT.