Are Indians Growing Richer?

NEW DELHI: Little over a fortnight ago, the Indian income tax authorities released data on Income Tax Returns (ITRs) filed by salaried taxpayers and other non-tax audit cases for 2022-23. It showed that ITRs had grown to a record high of 7.4 crore.

As a result, the tax base – reflecting the surge in the country’s gross domestic product – has almost doubled from the level of 3.8 crore ITRs in 2013-14. This is not all.

Over the last decade, the number of people filing ITRs under each income tax slab has grown dramatically. It has either doubled, trebled, or in some instances even quadrupled.

Those filing ITRs in the income slab of Rs 5-10 lakh grew from 37.02 lakh in 2013-14 to 110.92 lakh in 2022-23; for Rs1 0-20 lakh from 12.04 lakh to 45.55 lakh; for Rs 20-50 lakh from 4.10 lakh to 19.20 lakh; Rs 50 lakh-1 crore from 80,454 to 3.32 lakh; and above Rs 1 crore from 46,384 to 1.70 lakh.

This acceleration in growth is due to a combination of better tax compliance and the wealth effect that has started to take effect in the Indian economy. There is a clear unprecedented visible trading up in the Indian economy as households are becoming richer – in a relative sense – as the value of their assets grow. So, are Indians are getting richer?