NEW DELHI New Delhi: The income inequality coverage for people earning up to Rs 5 lakh in India has declined by 74.2 per cent overall, indicating that the government’s sustained efforts are reaching the bottom of the pyramid, increasing the income of people in the ‘low income group’, a new report has revealed. A comparison of income inequality during assessment year (AY) 15 and AY 24 by the Economic Department of the State Bank of India (SBI) revealed that there has been a clear rightward shift in the income distribution curve in India, which means that people in the lower income group are increasing their income to move towards their share in the population.
The findings revealed that “the reduction in income inequality reflects the increase in the coverage of people in the lower income groups as well as their income, as 43.6 per cent of individual ITR filers belonging to the income group of less than Rs 4 lakh in AY 15 (FY 14) have moved upwards leaving the lowest income group.” In addition, 26.1 per cent of the gross income of the lowest income group earning less than Rs 4 lakh has shifted upwards over the intervening period, the study said.
Female labour force participation is rising (from 23.3 in 2017-18 to 41.7 in 2023-24), with Jharkhand, Odisha, Uttarakhand, Bihar and Gujarat seeing the highest growth.With increasing alignment with the progressive taxation regime, the contribution of direct taxes to total tax revenue reached 56.7 per cent in AY24 (54.6 per cent in AY23) – the highest in 14 years. The growth rate of personal income tax (PIT) collections has been growing faster than corporate tax collections since FY21, with PIT growing by 6 per cent as against CIT’s 3 per cent growth, the SBI study said.
There was a massive jump in ITRs filed during AY24, reaching 8.6 crores (as against 7.3 crores in AY22). A total of 6.89 crore or 79 per cent of these returns were filed on or before the due date, resulting in a drop in the share of returns (with penalty) filed after the due date from 60 per cent in AY20 to a mere 21 per cent in AY24. “We believe the total number of ITRs filed for AY25 could cross 9 crores by the end of March 2025 (7.3 crore ITRs have been filed by the due date) due to greater discipline among filers,” the SBI study said.
