Five individuals in the country reported an annual salary income above Rs 100 crore, 11 others had such income in the Rs 50-100 crore range and 58 persons earned Rs 25-50 crore from salary in FY15 (assessment year 2015-16). This was when salary income — the largest source among individual taxpayers — was shown as nil by a substantial 54% of the 4.07 crore people who filed tax returns in the year. For a comparison, none reported salary income higher than Rs 100 crore in FY12. During that year, six persons declared salary income of Rs 50-100 crore and another 23 reported to have earned Rs 25-50 crore from salaries; 60% of the 2.88 crore people who filed tax returns in that year showed nil income from salaries. If earnings from other sources like capital gains, business/interest/rental incomes are also included, 318 individuals had shown total taxable income of over Rs 25 crore in FY15 compared with 196 in FY12. While the tax return statistics for FY15 (AY16) released by the income tax department on Wednesday indicated a gradual increase in salaries at the lower end and relatively steeper rises at the top, it also reflected the stress in the industry over the last few years.
Not a single non-corporate firm reported taxable income (after statutory deductions) of above Rs 500 crore in FY15 while one did so in FY12. Also, the number of such firms that reported taxable income in the Rs 100-500 crore range increased only marginally from 19 in FY12 to 24 in FY15. That rate is lower than what the GDP growth during these years would warrant and reflects subdued corporate tax buoyancy. Among companies, 3,249 reported taxable income above Rs 25 crore in FY15, up from 2,362 in FY12. However, the rate of growth of “tax payable” by companies between FY12-FY15 was 46%, lower than the corresponding growth for individuals at 68%. In case of firms other than companies, the growth in tax payable during the period was even lower at 41%. Separately, the time series data FY01-FY17 released by the department confirmed a higher (likely short-term) growth in personal income tax (PIT) collections due to the demonetisation of high-value currency notes in November last year. PIT collections grew 21.42% in FY17 compared with 8.22% in the previous year. However, the growth in PIT mop-up in FY17 won’t look exceptional when compared with the rates of 20% (FY14) and 18.6% (FY13).
The overall direct tax revenue grew 14.5% in FY17 compared with 6.6% in FY16, with resultant increase in buoyancy (tax growth/GDP growth) to 1.22 in FY17 from 0.8 in FY16. However, this was not sufficient to reverse the trend in recent years of direct taxes losing their share in the government’s overall tax mop-up: The share declined from 56.3% in Fy14 to 51% in FY16 and further to 49.6% in FY17. The department’s data also showed that the number of individuals filing tax returns has increased from 2.9 crore in FY12 to 3.7 crore in FY14 and further to 4.1 crore in FY15. As the 4.35 crore tax filers (incorporated and unincorporated entities, HUFs and individuals) in FY15 were divided into 24 groups — with annual (taxable) income from different sources ranging from less than zero to over Rs 500 crore — the largest group (of 1.64 crore) was that of taxpayers with an average income of Rs 2.83 lakh, followed by one of 68.9 lakh filers with an average income of Rs 2.31 lakh.
The government had released the post 2000-01 time-series data on direct taxes and the detailed statistics on the pattern of tax filing of profile of tax filers from FY12 onwards, after economists like Thomas Piketty lamented about the inadequacy of such data in the public domain to assess the evolution of income distribution in the country.