Growth in incomes in the top most slabs have increased substantially compared to (a) previous two years and (b) lower income brackets
Illustration: Uttam Ghosh/Rediff.com
Sum of gross incomes of companies in the slab above Rs 1 crore shot up by 48 per cent - from Rs 7 lakh crore in 2013-14 to Rs 10.4 lakh crore in 2014-15, data on income tax returns for assessment year 2015-16 (AY16) show.
In the same period, growth in the number of assessees in the top slab was 19 per cent.
This upward growth comes from a lower base. Sum of incomes in the top slab had dropped by 10 per cent in AY15.
Corporate incomes in the lower slabs (up to Rs 10 lakh) show a decline in AY16 from Rs 5,060 crore to Rs 4,660 crore.
The number of assessees, too, show a decline from 243,000 to 214,000 (see chart 1).
However, individual incomes in the top slab - Rs 1 crore and above - fell 25 per cent from Rs 2 lakh crore to Rs 1.5 lakh crore, despite the 23.6 per cent rise in number of assesses from 48,400 to 59,300.
Individual incomes in the lowest and tax-free income slab - up to Rs 2.5 lakh - dropped with the highest degree, 43 per cent, from Rs 2.6 lakh crore to Rs 1.5 lakh crore in AY16.
The number of assesses too reduced 40 per cent (see chart 2).
This was matched by a similar rise in number of assessees and individual incomes in the next income slab, Rs 2.5 lakh to Rs 5 lakh.
Number of assesses in this slab rose 55 per cent, and the sum of incomes in this slab rose from Rs 4.8 lakh crore to Rs 7.3 lakh crore, a substantial increase of 51 per cent.
Similarly, trends in salary incomes too show a change. Lower income slabs showed a higher income growth than upper income slabs till AY 2014-15.
In AY 2015-16, higher income slabs registered a higher growth than peers in lower income slabs (see chart 4).
Looking deeper into more detailed tax brackets yield some interesting insights into income growth in India.
Till AY 2014-15 (FY 2013-14), business incomes in lowest slabs-up to Rs 2 lakh-showed negative growth, those from Rs 2 lakh to Rs 100 crore showed positive growth, while those above Rs 100 crore were going down year on year.
Come AY 2015-16, reported incomes through business activities in the slab Rs 500 crore and above rose by 57 per cent in FY 2014-15.
This has come in consonance with an equally improved compliance growth of 67 per cent.
Growth in incomes in the top most slabs have increased substantially compared to (a) previous two years and (b) lower income brackets (see chart 3).
