New Delhi: Prime Minister Narendra Modi’s claims about only 1.5 crore Indians paying taxes in the country are seemingly correct, shows government data. However, there may be a hint of overstatement in his assessment of non-compliance.
At a media event Wednesday, Modi made a comment about poor tax compliance in India, drawing criticism from some quarters over the veracity of his claims.
“In the last 5 years, more than 1.5 crore of expensive cars have been sold in India. More than 3 crore Indians have travelled overseas for business or travel. Of the more than 130 crore population, only 1.5 crore people pay income tax. Of this, every year, those declaring an income of more than Rs 50 lakh is only 3 lakh,” Modi said at an event organised by news channel Times Now.
Later, some critics of the Modi government took to microblogging site Twitter to question him on presenting numbers that differ from the finance ministry’s data.
In AY 2017-18:
Indians who paid taxes: 3.3 crores
Total number of taxpayers who declared income over 1 crore: 140139.
Number of individual taxpayers disclosing income above Rs.1 crore: 81344.
Why is @narendramodi contradicting his government's own numbers? https://t.co/LUJbr9wAQ4 https://t.co/IjtJCJsLcJ
— Rupa Subramanya (@rupasubramanya) February 13, 2020
Modi goofed up his speech – wrong data given by Finance Ministry. As per Income Tax data 97,689 people disclosed Rs One Crore and above Income. Why has the Finance Ministry not even given correct figures to Modi?
— Swati Chaturvedi (@bainjal) February 13, 2020
PM keeps peddling this false theory that only 1.5cr of 130cr Indians pay income tax & many tax evaders must be punished
1:Average Indian's income is only ₹1.35 lakhs.
2:Less than ₹5 lakhs, no income tax.
3:Only 1.5cr Indians earn more than ₹5 lakhs.
4:So, only 1.5 cr pay tax pic.twitter.com/8i6pGGtRMH— Praveen Chakravarty (@pravchak) February 13, 2020
However, data from the income tax department shows the PM’s claims were not wrong.
How many pay taxes
While the prime minister didn’t refer to any particular year, he seemingly based his comments for the current financial year on previous years’ trends.
In assessment year 2019-20 (financial year 2018-19), nearly 6 crore individual taxpayers filed income tax returns, according to data available with the income tax department’s e-filing website for the year until January. Of these, nearly 4.5 crore taxpayers declared an income of up to Rs 5 lakh.
From AY 2020-21 for FY 2019-20, these taxpayers won’t be liable to pay any tax as they are eligible to claim a rebate announced in the Union Budget 2019-20. This will leave only around 1.5 crore taxpayers liable to pay taxes from AY 2020-21 onwards — effectively forming the basis for Modi’s statement.
The prime minister did understate tax compliance as those earning income up to Rs 5 lakh do have to file tax returns to claim the rebate and may even be subject to some tax deducted at source from their employers.
Further, more than half of India’s population is dependent on agriculture, and agricultural income is not taxable in India.
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How much tax is paid
PM Modi’s other claim that only 3 lakh taxpayers declared an income of over Rs 50 lakh was also correct.
As of January, according to the data available with the I-T department, 3.36 lakh individual taxpayers had declared an income of over Rs 50 lakh.
In his speech, Modi expressed disbelief over these numbers citing the number of people travelling overseas for business and tourism or sending children for overseas education or buying luxury cars.
Modi also said how only 2,200 professionals including engineers, doctors, Bollywood actors, chartered accountants and lawyers declare their annual income to be more than Rs 1 crore. Here again, the income tax department’s data supports his claim.
In a statement, the tax department said, “In the ITRs filed by individuals in current financial year, only about 2200 Doctors, Chartered Accountants, Lawyers & such other professionals have disclosed annual income of more than Rs.1crore from their profession (excluding other incomes like rental,interest,capital gains etc).”
The PM may not be wrong in his call for introspection when he claimed that there must be more professionals earning more than Rs 1 crore in the country’s Supreme Court alone.
Car sales data could be off the mark
However, Modi’s claims about the sales of 1.5 crore “expensive” cars in the country in the last five years could be an exaggeration.
The Society of Indian Automobile Manufacturers data showed that total passenger vehicle sales in the domestic market during 2014-15 to 2018-19 were only 1.5 crore.
Also read: To meet fiscal deficit target, Sitharaman’s Budget leaves out some expenditure
Can MOdi explain the 2000 crores deposited by Amit Shah into his bank accounts ?? Are these tax harassments only applicable to common citizens while politicians like Modi and Amit Shah and those various MLAs, MPs pay ZERO TAX ???
Puri Dal Kali hai.
What about Politians? Why Politians in India don’t file Income Tax Return and Pay Income Tax? Modi should put his house in order first now, reform IT Rules and make it Mandatory for Politians to file IT Return.
Who said politicians dont file taxes ?? Also, is Modi incharge of all politicians? Half the politicians who are crorepatis are Congress SC lawyers! And politicians in Govt disclosure their income publicly – what about opposition?
Very few Indians paying income tax is a bit of a red herring. Most are too poor to file a return of taxable income. Agriculture as a sector is exempt, although here again most farmers earn less than the taxable amount. More relevant is the fact that all Indians pay indirect taxes, some of which are quite regressive. 2. In America, with 25 times our per capita income, about 40% of households pay no taxes to the federal government. In fact, many of them receive subvention payments.
There is another problem with Modi’s data. Soon after Demonetisation, in the next year, the IT department as also late Jaitley claimed that 9 crore returns had been filed, thereby adding 3 crores assessees as compared to preceding year. Does it mean that approximately 7.5 crore people file only Nil returns? The IT return filers which was around 6 crores before DeMo could not have fallen to 1.5 crores within three years. Daal mein kuch kaala hai!
Filling returns and paying tax is not different?