Context:
Direct Taxes Data shows robust growth in gross total income of individuals and a widening tax base.
News Summary:
According to data from Central Board of Direct Taxes (CBDT) from Assessment Year (AY) 2013-14 to AY 2021-22:
- Returns filed by individual taxpayers increased to 6.37 crore (90% increase).
- Average gross total income for individual taxpayers increased to about ₹7 lakhs (56% increase).
- Increase in average gross total income for top 1% individual taxpayers is 42% while that for bottom 25% individual taxpayers is 58%.
- Proportionate contribution of the gross total income of:
- top 1% of individual taxpayers has decreased from 15.9 % to 14.6%
- bottom 25% of individual taxpayers has increased from 8.3% to 8.4% and from 75.8% to 77% for middle 74%.
About Tax Base:
- Tax base is the total amount of income, property, assets, consumption, transactions, or other economic activity subject to taxation by a tax authority.
- Significance of widening tax base –
- Improves government’s ability to fund social and physical infrastructure.
- Increases possibility of lowering tax rates and cesses imposed.
- Helps in better planning and budgeting of a fiscal year.
- Measures to increase tax base: Promoting voluntary compliances. easier filings, following up with potential non-filers, etc.
Central Board of Direct Taxes (CBDT):
- A statutory authority that functions under the Central Board of Revenue Act, 1963.
- Part of the Department of Revenue in the Ministry of Finance.
- It provides inputs for policy and planning of direct taxes in India and is also responsible for the administration of direct tax laws through the Income Tax Department.
Source: The Hindu
Previous Year Question
Consider the following statements:
1. Tax revenue as a percent of GDP of India has steadily increased in the last decade.
2. Fiscal deficit as a percent of GDP of India has steadily increased in the last decade.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer: (d)
