Only about 1 percent of India's population paid tax on their earnings in the year 2013, according to the country's income tax data, published for the first time in 16 years.
The report further states that a total of 28.7 million individuals filed income tax returns, of which 16.2 million did not pay any tax, leaving only about 12.5 million tax-paying individuals, which is just about 1 percent of the 1.23 billion population of India in the year 2013.
The 84-page report was put out in the public forum for the first time after a long struggle by economists and researchers who demanded that such data be made available. In a press release, a senior official from India's income tax department said the objective of publishing the data is to encourage wider use and analysis by various stakeholders including economists, students, researchers and academics for purposes of tax policy formulation and revenue forecasting.
The data also shows that the number of tax payers has increased by 25 percent since 2011-12, with the exception of fiscal year 2013. The year 2014-15 saw a rise to 50 million tax payers, up from 40 million three years ago. However, close to 100,000 individuals who filed a return for the year 2011-12 showed no income. The report brings to light low levels of tax collection and a massive amount of income inequality in the country, showing the rich aren't paying enough taxes.
Low levels of tax collection could be a challenge for the current government as it scrambles for money to spend on its ambitious plans in areas such as infrastructure and science & technology. Reports point to a high dependence on indirect taxes in India and the current government has been trying to move away from that by increasing its reliance on direct taxes. Official data show that the dependence has come down from 5.93 percent in 2008-09 to 5.47 percent in 2015-16.