We need to do incremental reforms; 13.6% taxpayers migrated to higher tax bucket in 10 yrs: SK Ghosh, SBI

economictimes.indiatimes.com:

SK Ghosh, Group Chief Economic Adviser, SBI, says analysing I-T data showed that “close to 14% of the overall tax filers have left the income group of less than Rs 5 lakh and moved on to a higher income group. The threshold income, which means the weighted income across all income classes, whereby we can define a middle income class in India, has moved up from Rs 4 lakh to Rs 13 lakh. The number of taxpayers is three times more than what it was 10 years back.”How did you slice the Income-Tax data to make the inference on the growing Indian middle class and jump in per capita income?The data put out by the Income Tax department for the last 10 years has a plethora of information and that busts a lot of myths.

If I talk about the first myth, you always say that only 4-5% of India's population pay taxes. But the total number of tax-paying population as of March 2024 could be in excess of 85 million, which is 37% of the formal labour force. Basically one in every third formal citizen pays taxes today and that means the entire population in the formal sector is paying taxes today.

The second thing is that the number of zero tax filers is now only 64%. This was around 86% 10 years back. Also there has been other improvements in terms of refunds, tax assessments, demand and other things.

Also if you look into the overall tax return data, the most important finding is that close to 14% of the overall tax filers have left the income group of less than Rs 5 lakhs and moved on to a higher income group. The threshold income, which means the weighted income across all income classes, whereby we can define a middle income class in India, has moved up from Rs 4 lakh to Rs 13 lakh. So in short, a middle income class person in India