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Govt. throws open I-T data; tax base stays narrow
April, 30th 2016

Just one per cent of individuals, who declared their income in assessment year 2012-13, accounted for almost 20 per cent of the taxable income, according to government data on income tax released for the first time on Friday. Among corporates, however, this imbalance is starker, with a little more than 5 per cent of the companies accounting for a whopping 94 per cent of the taxable income.

Detailed income tax data is now available as the Central Board of Direct Taxes has made public information on the total number of taxpayers in the country, income disclosed in IT returns by various category of taxpayers etc.

“It is a big step towards transparency & informed policy making,” Prime Minister Narendra Modi tweeted. The data shows that direct tax collections have fallen drastically in the last five years, growing at an average annual rate of 8.5 per cent between assessment years 2011-12 and 2015-16, compared to the 14.1 per cent over the previous five years.

“Direct taxes are a consequence of income earned, unlike indirect taxes,” Dinesh Kanabar of Dhruva Advisors told The Hindu. “Corporate profits have not grown over the last five years. In fact, their growth has dropped considerably. The collections are a reflection of how this has moved. Corporate taxes contribute the bulk of the growth in direct tax collections.”

The government data supports this. The precipitous drop in the growth rate of direct tax collections was accompanied by an equally dire slowdown in the growth of corporate tax. Corporate tax grew at an average annual rate of 7.1 per cent between assessment years 2011-12 and 2015-16, down from the heady 15.6 per cent seen in the previous five years.

The personal income tax data — which also includes securities transaction taxes — on the other hand, barely witnessed a change in growth rates in this period, growing at an annual average of 9.1 per cent between 2011 and 2015, just 0.2 percentage points slower than the growth seen in the previous five years.

Interestingly, the data shows that there were 13.3 lakh individuals declaring an income of more than Rs 10 lakh a year — the section of people the government has excluded from the LPG subsidy.

Among the states, Gujarat saw the fastest growth in its direct tax collections, growing 185 per cent in FY2014-15 to Rs 12,577 crore compared to its level in FY2008-09. Tamil Nadu saw the next-fastest growth in the period, with its direct tax collections growing 116 per cent to Rs 20,651 crore in FY2014-15. Maharashtra (112 per cent) and West Bengal (105 per cent) were the other states seeing rapid growth in their direct tax collections.

“Tamil Nadu has huge investments especially in auto ancillaries,” Mr Kanabar explained. “The situation is the same in Gujarat. It’s a factor of industrialisation and where the corporates choose to have their registered offices.”

Some anomalies too

The State-wise data also revealed some anomalies. For example, Mizoram recorded Rs 39.8 crore of direct tax collections in FY2014-15, which is more than double what it collected in the previous year. Chattisgarh, on the other hand, saw its direct tax collections grow 0.01 per cent in FY2014-15 to Rs 1,287 crore compared to its level in 2008-09.

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