Analysis of Income Tax Return data shows there has been a cumulative 74.2 per cent decline in income disparity coverage for those earning up to тВ╣5 lakhs, SBI report says
Decoding Income Tax Return (ITR) data, a research report by the SBI has said that has said that individual income inequality has decreased.
тАЬOur analysis shows that there has been a cumulative 74.2 per cent decline in income disparity coverage for those earning up to тВ╣5 lakhs,тАЭ the report prepared by a team led by SBIтАЩs Group Chief Economic Advisor Soumya Kanti Ghosh said. тАЬThis shows the continuous efforts of Govt are reaching the bottom of pyramid тАУ that is leading to increase in income of тАШlower income groupтАЩ people,тАЭ the report added.
The report has used the economic concept тАШGini CoefficientтАЩ. It measures income inequality by using Lorenz Curve in nations by determining how income is distributed across their population. It ranges between тАШZeroтАЩ (Complete Equality) and тАШOneтАЩ (Complete Inequality). The declining number showing inequality is declining.
According to the report, тАШGini CoefficientтАЩ estimated using ITR data of taxable income of individuals shows that individual income inequality has decreased from Assessment Year 2012-13 (Fiscal Year 2011-12) to AY24 (FY23) from 0.489 to 0.460. However, it is still higher than 0.435. achieved in AY 22 (FY 21).
тАЬRetail investors, specifically lower income group, incurring losses in F&O segment тАУ is one of the reasons of rise in Gini coefficient in last two years. Further, based on the past trends we have projected ITR data for each Income groups for AY25 and based on that we have estimate that Gini coefficient will further decrease to 0.441 in AY25,тАЭ it said.
Number of Income Tax return filers rose to over 8.61 crore in FY 24 from around тВ╣3.8 crore on FY 14. The report said that 43.6 per cent Individual ITR filers belonging to Income group of less than тВ╣4 lakhs in AY15 (FY14) have left the lowest income group and shifted upwards. Over 15 per cent and over 18.5 cent are shifted in the income group of тВ╣4 lakhs to тВ╣5 lakhs, and тВ╣5 lakhs to тВ╣10 lakhs respectively, while 6.7 per cent people shifted in the income group of тВ╣10 lakhs to тВ╣20 lakhs and rest further upwards.
тАЬ26.1 per cent of the gross income of lowest income group of lower than тВ╣4 lakhs has shifted upwards with 5.5 per cent gross income shifted towards тВ╣4 lakhs to тВ╣5 lakhs group, 5.4 per cent towards тВ╣5 lakhs to тВ╣10 lakhs group, 5.8 per cent towards тВ╣20 lakhs to тВ╣50 lakhs group, and 1.8 per cent in тВ╣50 lakhs to тВ╣1 crore group,тАЭ the report said.
State wise ITR filed during AY24 shows that Maharashtra, Uttar Pradesh, Gujarat, Rajasthan and Tamil Nadu are the top 5 states. These states constitute 48 per cent of the total income tax returns filed in AY24. Overall, there have been 5.1 crore more ITRs filed in AY24 over AY15, with the maximum increase registered in Maharashtra followed by Uttar Pradesh, Gujarat, Rajasthan and Tamil Nadu.
Talking about crorepati taxpayers, the report mentioned that in the last 10 assessment years while the total number of taxpayers increased by 2.3 times to 8.62 crore in AY24, the growth is quite fascinating in the income group more than тВ╣10 lakh. Granular analysis indicates the shifting of middle class in India from income range of тВ╣1.5-5.0 lakh in AY14 to тВ╣2.5- 10.0 lakh in AY24. тАЬEven the crorepati taxpayers increased 5 times to 2.2 lakh in AY24 vis-├а-vis AY14,тАЭ he said.
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