New Delhi :Over 81,000 Indians earned in excess of Rs 1 crore a year in 2016-17, according to data released by the tax department, an increase from around 46,000 in 2013-14.
Data also shows that India’s income tax buoyancy and direct tax to gross domestic product (GDP) ratio both reached levels they have not seen in the past decade in 2017-18, with the country’s top tax official saying this is a reflection of the “widening and deepening” of the tax base although some experts aren’t sure this is the case.
The number of tax returns increased from 37.9 million in 2013-14 to 68.5 million in 2017-18, which also includes the country’s sudden invalidation of high value currency notes in November 2016.
Incomes of all categories of Indian taxpayers increased by 67% in the last four years, the data released by the income tax department showed. Taxpayers disclosed a gross total income of Rs 44.78 lakh crore in 2016-17 against Rs 26.92 lakh crore in 2013-14.
Releasing key statistics of income tax collection for a period of four years time, the Central Board of Direct Taxes (CBDT) added that the direct tax to GDP ratio grew every year in the three years to 2017-18, touching a decade’s high of 5.98% in 2017-18.
The buoyancy factor, which is the growth in taxes for every unit change in GDP, is also at its highest level in the last 10 years at 1.81.
“As the economy grows, over a period of time the direct tax collection should increase in proportion to indirect tax collection. Direct tax is a more equitable form of taxation and in developed economies its share is higher. This is a global phenomenon and it is good that India is following the trajectory,” said MM Joshi, former CBDT chairman.
While both the tax to GDP ratio and the buoyancy have moved up, the change isn’t significant enough, said one expert.
“The whole argument that demonetisation pushed up income tax collection does not get traction if the tax to GDP ratio or the buoyancy factor is considered from the data provided by the tax department,” said Pronab Sen, former chief statistician of India.
The number of returns filed by taxpayers has also increased by 65% from 33.1 million in 2013-14 to 54.4 million in 2017-18.
“Both widening and deepening of the tax base has taken place during the last four years. It is the impact of three things: legislative amendments, better enforcement and smarter administrative measures,” said CBDT chairman, Sushil Chandra.
The collection and decimation of income tax statistics has helped the department in identifying that the slowest growth in taxpayers and declared income has been for the “non-salaried individual” category.
Cabinet clears setting up of centralised GST appellate authority
New Delhi: The Union Cabinet on Wednesday approved setting up of a centralised Appellate Authority for Advance Ruling (AAAR) under the goods and services tax that would decide on cases where there are divergent orders at the state level.
The setting up of a centralised AAAR would require amendments to the GST Acts. The centralised authority as an appellate body will only take up cases wherein the Authority for Advance Ruling (AAR) of two states have passed divergent orders.
The Goods and Services Tax (GST) Council, headed by Finance Minister Arun Jaitley, and comprising state counterparts, in December decided to establish the centralised AAAR.
“The Cabinet has cleared the GST appellate authority,” a source said after the meeting of the Cabinet headed by Prime Minister Narendra Modi.
In view of the confusion created by contradictory rulings given by different AARs on the same or similar issues, the industry had been demanding a centralised appellate authority that could reconcile the contradictory verdicts of different AARs.
Urbanisation to be big driver of Indian economic growth: Kant
Davos: Urbanisation will be a big driver of economic growth in India going forward, supported by favourable macroeconomic factors, accelerated infrastructure building and continuing reforms, NITI Aayog CEO Amitabh Kant said.
Speaking here at an event on sidelines of the World Economic Forum Annual Meeting, he also said the Indian economy may even exceed the IMF growth forecast of 7.5 per cent for the country.
Kant said IMF has forecast 7.5 per cent growth for India despite a gloomy outlook for the global economy and this itself is good, though there are expectations that this estimate would be surpassed. He said India is giving a big push to urbanisation with more than 100 smart cities being developed.
The country is also using technology in a big way to change the way business and governance is done, he added. Besides a massive infrastructure building is happening, bank credit flow has rebounded and macroeconomic factors like inflation and fiscal deficit are also being supportive, Kant said.
DIPP Secretary Ramesh Abhishek noted that states are competing with each other to attract investments and all political parties have adopted the economic reform process. He listed various reform initiatives undertaken in India, including on areas like ease of doing business, FDI, manufacturing and taxation.
They were speaking at Institutional investors’ breakfast roundtable, organised by the industry chamber CII and Kotak Mahindra Bank. Other participants included CII Director General Chandrajit Banerjee and leaders from Indian and foreign companies.
On questions about some persisting issues in doing business including on tax and insolvency related issues, Abhishek said a lot of efforts have been put in to remove all bottlenecks and starting a business doesn’t take more than a day. Besides, special provisions have been made for startups and angel investors, he added.
Kant said efforts are also being made to remove all physical intervention and digitise the entire process of inter-ministerial and inter-department consultations to fast-track the decisions.
India will surpass China, says Raghuram Rajan
Davos: India will eventually surpass China in economic size and will be in a better position to create the infrastructure being promised by the Chinese side in South Asian countries, former RBI Governor Raghuram Rajan said.
Addressing a session on Strategic Outlook for South Asia, Dr Rajan said that the Indian economy would continue to grow while growth rate is slowing down in China.
“Historically, India had a bigger role in the region but China has now grown much bigger than India and has presented itself as a counter-balance to India in the region,” Dr Rajan said at the WEF Annual Meeting 2019.
“India will become bigger than China eventually as China would slow down and India would continue to grow. So India will be in a better position to create the infrastructure in the region which China is promising today. But this competition is good for the region and it will benefit for sure,” he said.
The comments assume significance with China working on a lot of infrastructure projects across the region. In 2017, India became the sixth largest economy with a GDP of $2.59 trillion while China was the second large with a GDP of $12.23 trillion.
At the same session, Nepal PM K.P. Sharma Oli cited collaboration with China as well as India as reasons for the economic growth.