Weighted mean income of Income Tax Return (ITR) filers increased to ₹13 lakh in the Assessment Year (AY) 2023 from ₹4.4 lakh in AY2014, and could  further jump to ₹49.7 lakh in 2047 with shifting of distribution of tax-filers from lower income group to upper income group, according to State Bank of India’s economic research report “Ecowrap”.

Per capita income is expected to increase from ₹2 lakh in FY23 to ₹14.9 lakh in FY47 (in USD terms, the corresponding increase comes to about $12,400 in FY47 from about $2,500 in FY23), per the estimates by SBI’s economic research department (ERD).

“Circulatory migration/skilled workforce upgrading to better opportunities/transitioning to a higher income bucket as the Indian diaspora finds the promises of the new Indian economy lucrative enough to collaborate in innovative ways in tandem with inter-State migration needs to be better captured in ITR returns to enable better framing of policy narratives,” said Soumya Kanti Ghosh, Group Chief Economic Adviser, SBI.

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Deciphering the IT returns data, the ERD observed that the tax filer base, helped by ongoing reforms and confidence building measures coupled with a galvanising economy firing on all cylinders, promises to bring to the net 48.2 crore IT filers in FY47 (from about 7 crore in FY23), increasing its share in taxable workforce/workforce eligible to pay taxes to 85.3 per cent (from current 22.4 per cent)!

“Formalisation drive of nearly 7 crore MSMEs promises to broad base the cohort suitably. 25 per cent of ITR filers are expected to leave the lowest income strata by FY47 (against 13.6 per cent leaving the lowest income strata between AY12-AY23),” Ghosh said.

He said there is a great tale in the offing as the ascent of the great Indian middle income class is but all too perceptible, ready to propel the country into a middle income economy cohort.

Zero tax liability

According to the report, there has been a material decline in zero tax liability, with their share in total returns filed declining to 64 per cent in AY23 from 84.1 per cent in AY12.

“Juxtaposing the same against buoyancy in tax filing numbers witnessed in recent years and calibrating with migratory patterns emerging as mass of the working population seeks befitting opportunities across the latitude of the vast country could help policy makers in formulating next level measures as the economy gears up to take the leap of faith,” per the report.

State-wise ITRs

State wise ITR filed during AY23 shows that Maharashtra, Uttar Pradesh, Gujarat, Rajasthan and West Bengal are the top 5 States. These States constitute about 48% of the total income tax returns filed in AY23, the report said.

Overall, there have been 64 lakh more ITRs filed in AY23 over AY22, with the maximum increase registered in Maharashtra followed by Uttar Pradesh, Punjab, Gujarat, Rajasthan.

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In terms of percentage growth, smaller states such as Manipur, Mizoram and Nagaland have registered more than 20 per cent increase in ITR filed during the last 9 years.

However, this data should also be seen in terms of migration from States as the ITR filing is linked with PAN card address, but the place of working is different from place of domicile for many citizens.

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