Prime Minister Modi said that India is progressing to become the 3rd largest economy in the world

The goal is to make India the third largest economy in the world, these were the words of the Prime Minister during his address to the nation on August 15.

Presenting a vision for the next 24 years, the Prime Minister announced the arrival of Bharat by 2047, which the Prime Minister said would be the government’s driving force going forward.

Government policies over the past several years have aimed to boost India’s economy.

The Prime Minister took to Twitter to share data on India’s growing prosperity.

„Over the past few days I have come across interesting pieces of research by @TheOfficialSBI and @capitalcalculus with insights into India’s growing prosperity. Citing these works and sharing some thoughts on @LinkedIn,” the Prime Minister tweeted.

A growing Indian middle class and rising incomes

The rise of a new middle class will move the nation towards a middle-income economic status.

Studies (one by SBI Research and another by Anil Padmanabhan, journalist) show that India is making significant progress in achieving equitable and shared prosperity.

The SBI study indicated that the average income over the last 9 years has increased from Rs 4.4 lakh in AY14 to Rs 13 lakh in FY23 (based on ITR returns).

Padmanaban’s study of ITR data expands the tax base across various income ranges.

Tax filings have increased at least threefold in each bracket, with some reaching nearly fourfold.

Also, the study highlights positive performance in terms of increase in income tax filing across states. When comparing ITR filings between 2014 and 2023, the data paints a promising picture of increased tax participation across all states.

The increase in ITR filings is a result of government policies.

One of the major taxation reforms in Indian tax history is the Goods and Services Tax (GST) introduced in 2017. The new regime came with revised and significantly reduced tax rates in various income tax brackets, thereby reducing the tax burden on individuals.

The new reforms were primarily aimed at simplifying the income tax structure, providing flexibility to taxpayers and improving tax compliance. The option given to taxpayers to choose between the old and new tax rules was a significant step that struck a balance between continuity and change. The new system scrapped 70 deductions and exemptions, aimed at making income tax filing more economical and transparent.

READ  Maldives has emerged as the fastest growing economy in South Asia

The government has taken digital initiatives to increase tax compliance and simplify tax administration. The faceless tax audit and appeal system aims to ease the tax compliance burden and ensure transparency and efficiency in tax administration. Also, the government has introduced a new simplified tax compliance regime, 'One Country One Taxation System’.

One of the best performing states in terms of ITR filings is Uttar Pradesh

Data analysis of income tax returns by SBI report shows that Uttar Pradesh has emerged as one of the top states when it comes to filing ITR. In June 2014, Uttar Pradesh recorded 1.65 lakh ITR filings, but by June 2023, the figure had risen to 11.92 lakh.

The SBI report presents an encouraging note that our smaller states and that too the North Eastern states of Manipur, Mizoram and Nagaland have shown more than 20% growth in ITR filings in the last 9 years.

This shows that not only is income high, but so is compliance.

India’s middle class has grown significantly in size and income over the past nine years, according to SBI’s latest research and a study based on taxpayer data.

According to the SBI research report, the average income increased to Rs 13 lakh in FY14 from Rs 4.4 lakh in AY14 (income based on ITR).

One of the main reasons is the shift from low income group to high income group. Another reason is a surge in the number of tax filers who previously did not report income.

Rise in income levels within income brackets

An analysis of the ITR data suggests that the tax base is widening, especially at Rs. Among those with income below 20 lakhs.

READ  The economy is in focus as elections approach

This hike suggests better wealth creation or improved tax compliance. Overall, more people are filing income tax returns.

Rising income levels are evident across all income brackets. Every income bracket has seen at least a three-fold increase in the number of filers, and some have quadrupled.

Geographical spread of income growth

ITR data analysis throws up some more interesting insights. Geographically, the ITR filings for the last financial year, as on June 30, are fairly spread.

A comparison of two graphs capturing ITRs filed in 2014 and 2023 reveals that this trend is increasing across states.

The landscape of Income Tax Return (ITR) filings in India has seen a significant upsurge across all states, with Uttar Pradesh and Bihar leading the way in this significant change.

In June 2014, Uttar Pradesh recorded 1.65 lakh ITR filings, but by June 2023, the figure had risen to 11.92 lakh.

Similarly, Bihar, which registered just 50,793 ITR filings in June 2014, has reached an astounding 4.71 lakh filings by June 2023.

In North East, Chhattisgarh and Jammu and Kashmir, new ITR filings have increased by double digits.

According to the SBI report, in terms of % growth, the smaller states of Manipur, Mizoram and Nagaland have recorded more than 20% increase in ITR filed in the last 9 years.

The change in ITR filed during AY23 against AY15 shows that the top 5 states are Maharashtra, Uttar Pradesh, Gujarat, Rajasthan and Tamil Nadu. These states accounted for 46% change in income tax returns filed during AY23 and AY15.

64 lakh ITRs were filed in AY23 over AY22, with the highest increase recorded in Maharashtra, followed by Uttar Pradesh, Punjab, Gujarat and Rajasthan.

Transition of lower middle income class to middle and upper class in last 10 years

According to the SBI survey report, 13.6% people have moved out of low income in AY23 as compared to AY12.

READ  South Africa must make Transnet work or economy will grind to a halt - Menor

Breakdown of population that moved into higher income groups:

8.1% increase in population with income between 5 lakhs and 10 lakhs

3.8% increase in population with income between 10 lakhs and 20 lakhs

1.5% increase in population with income between 20 lakhs and 50 lakhs

0.2% increase in population with income between Rs 50 lakh and Rs 1 crore

0.02% increase in population with income above 1 crore

Government policies leading to widening of tax bracket

According to an SBI research report, ITR filers are expected to increase from 70 million (7 crores) in FY23 to 482 million (48.2 crores) in FY47, increasing its share of the workforce with taxable base from 22.4% to 85.3% in FY23. In FY47.

By FY47, it is projected that 25% of ITR filers will fall out of the low income category.

25% of which:

17.5% earn between Rs 5 lakh and Rs 10 lakh

5% earn between Rs.10 lakh to Rs.20 lakh

3% earn between Rs.20 lakh to Rs.50 lakh

0.5% earn between Rs.50 lakh to Rs.1 crore

0.075% Rs. Earn more than 1 crore

Per capita income is expected to increase from Rs 2 lakh in FY23 to Rs 14.9 lakh in FY47 (in US dollar terms, a corresponding increase from ~$2500 in FY23 to ~$12,400 in FY47).

Indian Mutual Funds & Demat Rise

Growth in opening of demat accounts is another proxy indicator of wealth creation. As the above graphic shows, in four years, the number of demat accounts has doubled.

Similarly, assets under management in the Indian mutual fund sector, a popular means of investing in equity markets, have risen over the past decade. It grew more than four times from Rs 10 lakh crore in May 2014 to Rs 46.37 lakh crore as on July 31 this year.

Dodaj komentarz

Twój adres e-mail nie zostanie opublikowany. Wymagane pola są oznaczone *