Only 5.5% Of Tax-Eligible Indians Actually Pay Tax: Economic Survey

You have heard the opt-repeated bane of most Indians. “Where does all the tax money go?”. Truth is, there is not a lot of it.

According to the annual Economic Survey 2016, by the government of India, it has emerged that only about 5.5% of the people who earn pay their taxes and only 15.5% of the net national income is reported to the tax authorities.

The survey estimated that just 4% India’s voters are taxpayers, though it should be closer to 23% and 85% of the net national income fall outside the tax net.

India has a population of 1.2 billion or 120 crores out of which only 3 crore people pay tax while the majority falls between tax bracket of 3 lacs to 5 lacs (Income bracket). As per some estimates approx. 26% people are BPL (Below Poverty Line) in India and  14% people earn less than taxable income. 

To widen the tax net and raise revenue for spending on India’s human capital development, the survey called for bringing rich farmers into the tax net, raising property tax rates and phasing out tax exemptions.