Direct Taxes Data shows robust growth in gross total income of individuals and a widening tax base
According to data from Central Board of Direct Taxes (CBDT) from Assessment Year (AY) 2013-14 to AY 2021-22:
- Returns filed by individual taxpayers increased to 6.37 crore (90% increase).
- Average gross total income for individual taxpayers increased to about Rs 7 lakh (56% increase).
- Increase in average gross total income for top 1% individual taxpayers is 42% while that for bottom 25% individual taxpayers is 58%.
- Proportionate contribution of the gross total income of:
♦ top 1% of individual taxpayers has decreased from 15.9 % to 14.6%
♦ bottom 25% of individual taxpayers has increased from 8.3% to 8.4% and from 75.8% to 77% for middle 74%.
Tax base is the total amount of income, property, assets, consumption, transactions, or other economic activity subject to taxation by a tax authority.
Significance of widening tax base
- Improves government’s ability to fund social and physical infrastructure.
- Increases possibility of lowering tax rates and cesses imposed.
- Helps in better planning and budgeting of a fiscal year.
Measures to increase tax base:
- Promoting voluntary compliances.
- easier filings,
- following up with potential non-filers, etc.