In the last ten years, the number of people filing Income Tax Returns (ITR) has increased by 120 per cent. However, the burden of income tax on the middle class has reduced significantly. The middle class, earning up to ₹20 lakhs annually, now pays less tax compared to a decade ago.
According to the Income Tax Department, in the financial year 2013-14, before the Modi government came into power in 2014, individuals earning ₹10-15 lakhs annually paid an average tax of ₹2.3 lakhs. Currently, they pay an average of ₹1.1 lakhs. Similarly, those earning ₹15-20 lakhs per year used to pay an average tax of ₹4.1 lakhs ten years ago, but now their tax liability has decreased to ₹1.7 lakhs.
Tax burden reduced on those earning up to 10 lakhs
Ten years ago, individuals earning between ₹2.5 lakh and ₹7 lakh annually had to pay up to ₹25,000 in tax. Now, this group no longer has to pay any income tax. The share of taxpayers earning less than ₹10 lakhs annually in the total income tax collection has dropped to 6.22 per cent. In contrast, before 2014, during the UPA regime, this group’s share was 10.17 per cent.
Increased Tax Burden for Those Earning Up to ₹10 Lakh
A decade ago, individuals earning up to ₹10 lakh annually had a higher tax burden. However, now the tax contribution of those earning more than ₹50 lakh is rising. In the past 10 years, the number of Income Tax Returns (ITRs) filed by individuals earning over ₹50 lakh has increased by 391 per cent. In the financial year 2013-14, 1.85 lakh people in this category filed ITRs, and this number rose to 9.39 lakh in the financial year 2023-24.
Increase in Tax Contribution from High Earners
In the financial year 2013-14, individuals earning more than ₹50 lakh annually paid ₹2.52 lakh crore as income tax. By the financial year 2023-24, this amount had surged to ₹9.62 lakh crore. This reflects the growing tax contribution from higher earners.
Rise in the Number of Taxpayers
In the financial year 2013-14, 3.6 crore people filed ITRs. By the end of the 2023-24 financial year, the number of ITR filers had increased to 7.9 crore. This indicates a steady rise in the number of taxpayers over the past decade.
Economic Growth and Tax Compliance Driving Revenue
According to sources from the Income Tax Department, the scope of tax collection has expanded due to economic development, policy decisions, and improved rule compliance. For the current financial year 2024-25, the department has set a tax collection target of ₹22 lakh crore. As of the first week of November, ₹12.10 lakh crore has already been collected.