Earning pains: Fewer people reported income over Rs 100 cr in AY21

Even before the pandemic struck, the number of individuals reporting gross income of Rs 100 crore (Rs 1 billion) or more dropped to 136 in the assessment year 2020-21 (or financial year 2019-20) from 141 a year earlier, reflecting the impact of a slowing economy.

Their number had jumped 83%, year on year, in the assessment year 2019-20. Of course, the number of people with cumulative wealth of over Rs 100 crore would be much larger in the country.

In a written reply to the Rajya Sabha on Tuesday, finance minister Nirmala Sitharaman said: “Wealth tax has been abolished with effect from April 1, 2016, and, therefore, the Central Board of Direct Taxes (CBDT) does not any more capture information about complete wealth of an individual taxpayer.”

The rate of economic expansion plunged to an 11-year low of 4% in FY20, compared with 6.5% in the previous year, as the growth in both private consumption and fixed investment slowed down drastically.

As per the information available with the CBDT, there is no legislative or administrative definition of the term billionaire under direct taxes, she said.

To curb tax evasion, including through under-reporting of income, the income tax department has stepped up action in recent years. Such action includes searches, surveys, enquiries, assessment of income, levy of tax, interest, penalties, etc, and filing of prosecution complaints in criminal courts, wherever applicable.

Replying to another question, minister of state for finance Pankaj Chaudhary told the Rajya Sabha that Rs 81,179 crore was yet to be released to the state governments towards fully compensating them for their goods and services tax (GST) revenue shortfall for the financial year 2020-21.

“The states will be paid full GST compensation as per the GST (Compensation to States) Act, 2017, for the transition period by extending the levy of compensation cess beyond 5 years to meet the GST revenue shortfall as well as servicing the loan borrowed through special window scheme for which GST Council has already given its approval,” Chaudhary said.