pri Trend analysis of income tax: A complete overview Trend analysis of income tax: A complete overview

People coming under income tax assessment

According to the data of the AY 2015-16, only 1.7% of total Indians pay income tax. The number of people paying income tax rose from 3.65 crores to 4.07 crores paid income tax & the rest claims below taxable income.

% of taxpayer % of total taxes
4.63% of total taxpayers Pay 62.34% of total taxes
5.5% of total tax-payers Pay 13.92% of total taxes
89.86% of total tax-payers Pay 23.72% of total taxes

The main cause of this, as said by the Finance Minister Arun Jaitley, “India is a tax non-compliant society and too many people evade taxes.” In other words, many people under-report their income to evade taxes. But there are still many who actually earn less than the taxable income.

Now, let’s consider the income distribution that can make it more clear as to how much tax is actually received.

% of taxpayers Taxable Income range
93.3% of taxpayers Rs. 1-2.5 lakhs
6.28% of taxpayers Rs. 2.5-25 lakhs
0.35% of taxpayers More than Rs. 50 lakhs

Even if the number of taxpayers has increased, the total tax collection has decreased overall. This would be easier to understand with the help of a table.

Year Taxpayers
2013-14 1.66 crore
2014-15 1.91 crore
2015-16 2.05 crore


Year Tax revenue (INR)
2013-14 1.39 crore
2014-15 1.91 crore
2015-16 1.88 crore

New pan card users


pooja images 2

The IT (Income-Tax) Department has launched data that as many as 19.6 million new PAN cards were issued during the quarter ending March 2018. This is important to understand as the PAN card is a 10-digit Identification number that is required to pay tax & returns. In other words, the more the PAN card holders, the wider is the tax base.

PAN holders Total percentage
Individuals 97.46%
Firms 1.08%
HUF (Hindu Undivided Family)


2 states

You must have seen the movie or read the book. The story revolves around 2 people from 2 states. The same story can be narrated about the income tax scenario of India. The 2 most paying states in India are

  • Delhi
  • Maharashtra

While at the same time, some states have seen a rise in Income taxpayers. These are:

  • Karnataka
  • Tamil Nadu
  • Gujarat
  • Rajasthan*

*Rajasthan has seen a 3 times jump in the taxes in the last 7 years i.e. 5,813 crores in 2010-11 to 19,910 crore in 2017-18.

Furthermore, Uttar Pradesh (the most populous state) contributes just 2.3% of the total tax collection of the country.


Maharashtra images

Let’s not forget the North-eastern states when it comes to total income tax collection.

Top 5 states the annual growth rate Increment of taxes (in %) 2017-18
Mizoram 41%
Nagaland 32.1%
Sikkim 26%
Tripura 16.7%
Meghalaya 12.7%

Top 5 State-wise taxes paid (2017-18)

State’s Name Tax Paid
Maharashtra Rs. 3.84 lakh crore
Delhi Rs. 1.36 lakh crore
Karnataka Rs. 1 lakh crore
Tamil Nadu Rs. 67,583 crore
Gujarat Rs. 44,866 crore

Returns & taxes

2 crore pay taxes but don’t file income tax returns. At the same time, 2 crore file returns but don’t pay taxes according to statistics.

This data represents the individual tax payee

Range of tax No. of returns Sum of tax payable (Cr) Avg. tax payable (INR)
Zero 2.02 Cr 0 0
Up to Rs. 5 lakh 2.55 Cr 1,21,384 47,602
Between Rs. 5-10 L 5.57 lakh 38,314 6.9 lakh
Between Rs. 10-25 L 2.6 lakh 39,004 15 lakh
Between Rs. 25 L-1 Cr 87,026 39,239 45.1 lakh
Between Rs. 1 Cr- Rs. 50 Cr 14,048 33,824 2.4 Cr
Between Rs. 50 Cr- 100 Cr 16 975 60.9 Cr
Above Rs. 100 Cr 4 665 166.3 Cr

And this data represents the companies that pay taxes

Range of tax No. of returns Sum of tax payable (Cr) Avg. tax payable (INR)
Zero 3.9 lakh 0 0
Up to Rs. 5 lakh 2.9 lakh 2,825 97,749
Between Rs. 5-10 L 34,842 2,485 7.1 lakh
Between Rs. 10-25 L 34,264 5,449 15.9 lakh
Between Rs. 25 L-1 Cr 28,609 14,215 49.7
Between Rs. 1 Cr- Rs. 50 Cr 18,782 1,02,529 5.5 Cr
Between Rs. 50 Cr- 100 Cr 412 28,669 69.6 Cr
Above Rs. 100 Cr 466 2,39,549 514.1

Direct tax to GDP ratio

In the Financial Year 2017-18, the Direct Tax to GDP ratio was 5.98% (considered the best in 10 years).

  • The growth in personal income tax was 18.3%
  • And the growth of corporate income tax was 17.7%

The trend of the Direct tax to GDP ratio is given below:

Year Direct tax to GDP ratio
2015-16 5.47%
2016-17 5.57%
2017-18 5.98%

The comments made by the Finance Ministry on this data

  • “There is a constant growth in the direct tax-GDP ratio over the last three years and the ratio of 5.98% in the fiscal year 2017-18 is the best direct tax-GDP ratio in last 10 years”
  • “Demonetisation compelled holders of cash to deposit the same in the banks. The enormity of cash deposited and identified with the owner resulted in suspected 17.42 lakh account holders from whom the response has been received online through the non-invasive method” said the Finance Ministry.
  • “For AY (assessment year) 2014-15, corresponding to FY (financial year) 2013-14 (base year), the return filers had declared gross total income of 26.92 lakh crore, which has increased by 67% to Rs. 44.88 lakh crore for AY 2017-18, showing a higher level of compliance resulting from various legislative and administrative measures taken by the government, including effective enforcement measures against tax evasion,”

Note: Reference link for the above comments “Direct tax-GDP ratio of 5.98% in FY18 best in 10 years: Govt”

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Company: LegalRaasta
Location: New Delhi, New Delhi, IN
Member Since: 06 Jul 2019 | Total Posts: 1

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July 2021