reports all the relevant tax parameters for fiscal 2011-12 — who pays taxes, who should pay taxes, rates of taxation, revenue collected, etc.
Some suggestive conclusions:
The total amount of personal income tax (PIT) that could have been collected in 2011-12 was Rs 517,000 crore or Rs 5.17 trillion. The total amount that was collected was Rs 1.72 trillion indicating an overall compliance rate of 33 per cent. So two-thirds of the taxable population avoided paying taxes altogether or paid two-thirds less taxes than they should have.
The dominantly large share of the flow of black money each year is indicated by the gap in tax collected and tax due and for 2011-12 this gap, Rs 3.45 trillion, is about 4 per cent of GDP. For the 10 years 2002-03 to 2011-12, 4 per cent of average GDP is Rs 20 trillion. This suggests that the recent estimates pegging black money at around Rs 25 trillion are in the right ballpark — and that our “missing tax” estimates are broadly correct.
The largest share of missing taxes is among those earning between Rs 5 to Rs 10 lakh a year. They are in the top 7 per cent of the population, they number around 25 million, and only about 10 per cent of such individuals pay any tax. How much missing taxes is in this group, a group for which the average tax rate is only 10 per cent? About equal to the entire tax collected in 2011-12: Rs 150 thousand crore.
About Rs 1 trillion is lost among those earning between Rs 10 and Rs 20 lakh a year. Such individuals are in the top 2 per cent of the population, and only a third of such individuals pay any tax.
The super-rich or those earning more than Rs 20 lakh a year: there were 88 lakh such individuals and 58 lakh paid taxes, yielding a compliance rate of 66 per cent. Missing taxes for this group: Rs 0.46 trillion, or only 13 per cent of the entire amount of PIT missing in India.
If compliance levels stay the same, a surcharge of 3 per