Only 1% Indians will Pay Tax This Year, Shows IT Dept Data
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If you were to make a guess, how many Indians do you think will pay tax for the current financial year? Slightly over 1 per cent.
Earlier this week, the income tax (IT) department of India shared data related to Indian tax returns in a series of tweets. It said that during the current financial year (2019-20) nearly 5.78 crore individuals filed returns disclosing income for financial year 2018-19. Out of these, about 1.03 crore individual taxpayers are not liable to pay tax as they fall below the tax exemption threshold of INR 2.5 lakh.
That’s about until last year. For financial year 2019-20, this figure of tax exempted taxpayers is likely to quadruple.
This is because the 2019 Budget has exempted net taxable incomes below INR 5 lakh from paying any income tax. This tax sop can easily benefit taxpayers with incomes up to INR 7 lakh if they make use of the various deductions available. Standard deduction of INR 50,000 is available to all salaried taxpayers. Further, deduction up to INR 1.5 lakh on investments under section 80C (PPF, life insurance, ELSS, etc) is another avenue that can be easily exhausted.
In fact, even incomes up to INR 8 lakh can get their net income below the INR 5 lakh threshold by claiming additional deductions on home loan (up to INR 2 lakh), NPS (up to INR 50,000) or medical insurance (up to INR 25,000), among others.
As per data provided by the IT department, about 4.32 crore individuals reported income below INR 5 lakh in financial year 2018-19. Assuming that this number will largely remain unchanged for financial year 2019-20 as well, only 1.46 crore individuals will pay income tax for this financial year.
To put this number in perspective, India's total population is about 138 crore, as per United Nations. Hence, only about 1 per cent Indians will pay tax for the current financial year.
Only 8,600 People With Income Above INR 5 Crore
The data also revealed that only 46 lakh individuals disclosed income above INR 10 lakh. Out of this 46 lakh, 3.16 lakh have income above INR 50 lakh. Furthermore, the number of individual taxpayers who have disclosed income above INR 5 crore in the whole of the country is only around 8,600.
Source: Income Tax Department
Further, in the current financial year only about 2,200 professionals—doctors, chartered accountants, lawyers etc—disclosed annual income of more than INR 1 crore from their profession. This is excluding income from other sources like rental, capital gains, interest income etc.