Key Points
- Income inequality in India has gone down, according to SBI research.
- The Gini Coefficient fell from 0.489 in FY12 to 0.460 in FY23.
- Income disparity for those earning up to ₹5 lakhs has declined by 74.2%.
- The number of ITR filers increased from 3.8 crore in FY14 to over 8.61 crore in FY24.
- The majority of filers in FY24 are from Maharashtra, Uttar Pradesh, Gujarat, Rajasthan, and Tamil Nadu.
- The number of crorepati taxpayers rose fivefold to 2.2 lakh in AY24 compared to AY14.
Looma News
A research report by SBI looked into Income Tax Return (ITR) data and found that individual income inequality in India has decreased. It noted a 74.2% drop in income disparity for people earning up to ₹5 lakhs, showing that government efforts to help lower-income individuals are making a difference.
The report uses the Gini Coefficient to measure income inequality, which ranges from zero (complete equality) to one (complete inequality). It shows the Gini Coefficient has decreased from 0.489 in Assessment Year (AY) 2012-13 (Fiscal Year 2011-12) to 0.460 in AY24 (FY23). This is still higher than the 0.435 recorded in AY22 (FY21).
One reason for the Gini Coefficient increase over the past two years has been losses for retail investors, especially in the Futures and Options (F&O) market. Looking ahead, the report projects the Gini Coefficient will drop further to 0.441 by AY25.
The number of people filing Income Tax returns has grown significantly, jumping from about 3.8 crore in FY14 to over 8.61 crore in FY24. Notably, 43.6% of ITR filers who earned less than ₹4 lakhs in AY15 have moved up to higher income brackets. More than 15% shifted to the ₹4-5 lakh range, while 18.5% moved to the ₹5-10 lakh group. Additionally, 6.7% have transitioned to the ₹10-20 lakh income bracket, with others moving into even higher categories.
The report shows that 26.1% of the gross income from the lowest income group has shifted upwards, with 5.5% moving to the ₹4-5 lakh group and 5.4% to the ₹5-10 lakh group. The top five states for ITR filings in AY24, Maharashtra, Uttar Pradesh, Gujarat, Rajasthan, and Tamil Nadu, make up 48% of all returns filed, with Maharashtra seeing the highest increase in filings since AY15.
In terms of wealth, the number of taxpayers has increased by 2.3 times over the last ten assessment years, reaching 8.62 crore in AY24. The growth among those earning over ₹10 lakh is particularly notable, with the number of crorepati taxpayers rising fivefold to 2.2 lakh since AY14. A closer look shows a significant shift in the middle class, moving from the ₹1.5-5 lakh range in AY14 to the ₹2.5-10 lakh range in AY24.
