August 16, 2023
The mean income of individuals filing taxes will experience a substantial rise to INR 49.9 lakh by 2047
The count of tax filers has grown to 85 million in FY23 compared to 2.1 million in FY13
Over the period between FY11 and FY22, a notable 13.6% of individuals have progressed from the lowest income category
Migrating individuals have contributed 0.5-2.5% of the Gross State Domestic Product (GSDP) in specific states
India’s per capita income is expected to increase 7.5 times to reach INR 14.9 lakh (US$ 12,400) annually by 2047 from the present INR 2 lakh (US$ 2,500) in FY23, according to a study by the State Bank of India (SBI).
This aligns with the government’s target of transforming India into a developed economy by 2047.
The SBI study indicates that the mean income of individuals filing taxes will experience a substantial rise to INR 49.9 lakh by fiscal year 2047, up from INR 13 lakh in fiscal year 2022. This escalation can be attributed to the transition from a lower-income category to an upper-income category economy and tax buoyancy. The study also points out that the adoption of formalization due to the Goods and Services Tax (GST) and the UDYAM portal for Micro, Small, and Medium Enterprises (MSMEs) has increased income tax returns.
Tax filers have grown to 85 million in FY23 compared to 2.1 million in FY13. The economists at SBI predict that this number will rise further to 482 million by FY47, causing the proportion of the working population subject to taxation to escalate from 22.4% in FY23 to 85.3% in FY47.
The SBI economists assert that the advantages of migration, including federal collaboration and effective skill distribution, far outweigh any potential loss in GSDP for select states, along with the income from remittances.
The study anticipates a reduction of approximately 25% in the number of individuals filing zero-tax returns by fiscal year 2047 as most of them transition to the next income bracket.
Over the period between FY11 and FY22, a notable 13.6% of individuals have progressed from the lowest income category (below INR 5 lakh), with 8.1% ascending to the INR 5-10 lakh income range and 3.8% moving into the INR 10-20 lakh bracket.
Furthermore, the study highlights the substantial contribution of five states—Maharashtra, Uttar Pradesh, Gujarat, Rajasthan, and West Bengal—collectively accounting for nearly half of the total tax returns filed by fiscal year 2022.
The study also praises the positive influence of migration, noting that migrating individuals have contributed 0.5-2.5% of the Gross State Domestic Product (GSDP) in specific states.
Source: Economic Times