A new revelation has been made in the Income Tax department of the government during the financial year 2023-24. It has been noticed that the tax burden on people earning less than Rs 20 lakh annually, often considered the middle class, has decreased over the past 10 years under Prime Minister Narendra Modi's government.
Meanwhile, taxes for individuals earning more than Rs 50 lakh a year have gone up significantly. This has resulted in increase in the tax collected as well as less burden on the middle class.
Tax Burden Shift from Middle Class to Upper Middle Class
According to data from income tax returns (ITRs), the number of people earning more than Rs 50 lakh annually increased from over 1.9 lakh in 2013–14 to over 9.4 lakh in 2023–24, a five-fold increase. The income tax paid by individuals earning over Rs 50 lakh has more than tripled (3.2 times), rising from around Rs 2.5 lakh crore in 2014 to Rs 9.6 lakh crore in 2024.
According to a source, people who make more than Rs 50 lakh annually account for 76% of the income tax collected. The middle class now pays less in taxes as a result of this.
Why this Shift Happened?
Additionally, the source stated that "strong anti tax evasion and black money laws implemented by the Modi govt" are responsible for the rise in the number of individuals filing ITRs with yearly incomes over Rs 50 lakh.
Also there was a rule of anyone who made more than Rs 2 lakh annually were required to pay income tax in 2014. However, with the a number of exemptions and deductions given by the Modi government, anyone making up to Rs 7 lakh are exempt from paying taxes.
Reduction in Tax Collected From Middle Class
The share of income tax collected from individuals earning less than Rs 10 lakh annually has dropped, moving from approximately 10.2% of total tax in 2014 to around 6.2% in 2024.
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