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  1. Indians buy 25 lakh cars per year, but only 24 lakh people earn over Rs 10 lakh

Indians buy 25 lakh cars per year, but only 24 lakh people earn over Rs 10 lakh

India has just 24.4 lakh tax payers who declared an annual income of over Rs 10 lakh yet 25 lakh new cars, including 35,000 luxury cars, are being bought every year for last five years, a top official said.

By: | New Delhi | Updated: December 27, 2016 4:14 PM
The tax returns when compared with car sales throw astonishing numbers

India has just 24.4 lakh tax payers who declared an annual income of over Rs 10 lakh yet 25 lakh new cars, including 35,000 luxury cars, are being bought every year for last five years, a top official said. A nation of over 125 crore people had only 3.65 crore individuals filing their tax returns in the assessment year 2014-15, the official said alluding to a huge number of individuals being outside the tax net.

“Of the 3.65 crore individuals (filing returns in assessment year 2014-15), there were only 5.5 lakh people who paid income tax of more than Rs 5 lakh and accounted for 57 per cent of the total tax kitty. This essentially means that only 1.5 per cent of those filing tax returns (3.65 crore) are contributing to 57 per cent of tax kitty,” the official said.

The tax returns when compared with car sales throw astonishing numbers, he said.

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“Car sales on an average in last five years has been about 25 lakh per year. In the last three years the car sales were 25.03 lakh, 26 lakh and 27 lakh,” he said adding the statistics points to a large number of people having income to buy cars are outside the tax bracket.

A car normally has a life of seven years and a second car is purchased not before five years by a common man, the official said.

The income tax data collated shows only 48,417 persons reporting income of more than Rs 1 crore in a year. Yet luxury brands like BMW, Jaguar, Audi, Mercedes, Porsche and Maserati sell almost 35,000 cars every year.

Of the individuals filing returns, 5.32 lakh were with income of less than Rs 2 lakh per annum, and so not within the tax bracket.

He said 24.4 lakh filers declared their annual income of being more than Rs 10 lakh and there were 1.47 lakh tax fillers who had an income of over Rs 50 lakhs in a year.

Also during the 2014-15 Assessment Year, there were 1.61 crore people whose tax deducted at source (TDS) were deducted but they did not file income tax return (ITR), he said.

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India’s tax revenue as a percentage of its GDP was 16.7 per cent in 2016, compared with 25.4 per cent in the United States and 30.3 per cent in Japan.

The official said the numbers point to a significant number of people who are liable to pay taxes aren’t doing so. The government, he said, is shoring up its efforts to check tax evasion.

The November 8 decision to junk old 500 and 1000 rupee notes are one of the steps to tackle the menace, he said adding by mandating people to deposit the old currency in banks was a way to account for the unaccounted money and tax them.

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  1. Aromal Chenthamarakshan
    Dec 27, 2016 at 7:38 pm
    How many of them are Alto & Nano?
    Reply
    1. A
      ASIT DESAI
      Dec 27, 2016 at 10:47 am
      Cars are bought by Corporations, Pvt. Ltd Companies, Partnership firms and Proprietorships too - if one is inclined to write an article such as this, it would help to find out how many owners fall into which category and then theorise and insinuate and preach... Half baked articles especially in Financial media dont help improve their overall image nor lend themselves to being seen as actual analysts of any capability.
      Reply
      1. Anurag Gupta
        Dec 27, 2016 at 12:20 pm
        There are some real truths which are rarely discussed in a rational way. For example, an organization as a w struggles to meet its annual revenue targets, but most employees are rated Above Average. Similarly this car thing.
        Reply
        1. R
          Radhakrishnan Pattath
          Dec 27, 2016 at 12:26 pm
          It is Simple Logic. Next to the Flat, Car is the Priority. All would have gone for Car loan. Such people can be miserly in every thing for putting up a big front.
          Reply
          1. R
            RUPESH KUMAR
            Dec 27, 2016 at 11:11 am
            Generally majority of people buys Car on EMI, so it is not a one year income which matters but since it is spread over 4-5 years, we need to look at the w 5 years to arrive at any judgement. If government wants to track the buyers for tax evasion, it can make PAN mandatory for all the car purchase. At the end of the year it can check out of the total car owner how many of them have paid tax to government.
            Reply
            1. Bhavyank Shah
              Dec 27, 2016 at 10:44 am
              hahahha...Yeh sab INC ka diya gift hai IND ko. Unho ne kabhi tax base badhaya hi nahi and they hardly caught tax evaders.
              Reply
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