- 1. The Big Jump: ITR Filings Have More Than Doubled
- 2. State-Wise Analysis: Who Pays the Most?
- 3. Why the "5% Assumption" Matters
- Conclusion
Taxation is often a complex subject, but the latest data gives us a fascinating look into how India earns and pays.
We have analysed two sets of data: the official growth in Income Tax Returns (ITR) filed over the last decade (up to FY 2023-24) and a state-wise breakdown of tax contributions based on a specific assumption.
Here is a simple breakdown of what the numbers say about India's economy. You can also look at our Instagram post for a quick look. The link.
1. The Big Jump: ITR Filings Have More Than Doubled
The first thing that stands out from the official data is the sheer volume of people entering the formal tax net.
Looking at the data from FY 2013-14 to FY 2023-24, the growth is massive:
- In FY 2013-14: Total returns filed were 3.79 Crore.
- In FY 2023-24: Total returns filed jumped to 8.61 Crore.
What does this mean?
In just 10 years, the number of tax returns filed has increased by over 125%. This suggests that more Indians are earning taxable income, compliance is improving, and the economy is becoming more formalised.
Who is filing these returns?
For the Financial Year 2023-24, out of the 8.61 Crore total returns:
- Individuals: 8.13 Crore (The vast majority)
- Companies: 11.46 Lakh
- Firms: 16.54 Lakh
This clearly shows that the widening tax base is largely driven by individual taxpayers.
2. State-Wise Analysis: Who Pays the Most?
While the national numbers are growing, the contribution varies significantly from state to state.
To understand the "Tax Per Person" capacity, we used a model assuming that only 5% of the population in each state pays tax. Based on this assumption, we calculated how much tax is generated per taxpayer in major states.
The Top Performers (Rich States)
Unsurprisingly, states with major metro cities and corporate hubs lead the pack.
- Delhi: Topping the list, Delhi contributes approximately ₹1,82,239 per taxpayer. As the capital and a corporate hub, the income levels here are significantly higher.
- Maharashtra: Home to Mumbai (the financial capital), Maharashtra comes second with ₹1,18,370 per taxpayer.
- Karnataka: Driven by Bengaluru’s tech boom, Karnataka contributes ₹68,150 per taxpayer.
The Middle Ground
- Haryana: ₹44,480
- Tamil Nadu: ₹32,833
- Gujarat: ₹30,894
The Lagging States
The data highlights a stark contrast in states with large populations but lower per-capita income.
- Punjab: ₹13,035
- Bihar: ₹10,263
- Uttar Pradesh: ₹4,006
The UP Context:
Uttar Pradesh pays the least tax per person in this model (₹4,006). While UP has a massive population, this data suggests that the concentration of high-income earners (the top 5%) is much lower compared to a state like Delhi or Maharashtra. It indicates that while the state economy is large in volume, the per-person income generation for the tax-paying bracket is still developing.
3. Why the "5% Assumption" Matters
You might wonder, why did we assume only 5% of the population pays tax?
In India, a large portion of the population earns below the taxable limit (currently ₹7 Lakhs under the new regime). Additionally, agricultural income is exempt from tax. Therefore, calculating tax per total population would give a very small number.
By assuming a 5% tax-paying base, we get a more realistic picture of the burden shared by the earning class in each state.
- Delhi's 5% are paying a premium (₹1.8L average).
- UP's 5% are contributing significantly less (₹4k average), indicating a need for more high-income job creation in the region.
Conclusion
The data tells a story of two Indias.
On one hand, the national trend is incredibly positive. Moving from 3.79 Crore to 8.61 Crore ITR filings in a decade proves that the Indian tax system is becoming robust and inclusive.
On the other hand, the regional disparity remains a challenge. The tax burden and wealth generation are still heavily concentrated in urbanized states like Delhi, Maharashtra, and Karnataka, while states like Uttar Pradesh and Bihar have significant ground to cover in terms of per-capita income generation.
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