Taxpayers Earning Over Rs 5 Lakh Surge, Lowest Slab Sees A Decline

The upsurge in tax collections can be attributed, in part, to the rise in the number of individuals earning over Rs 10 lakh. In FY21, the figure stood at 81 lakh, up nearly 50% from the previous year and nearly 67% from the fiscal ended March 2019.

The number of individual taxpayers earnings between Rs 5 lakh and 10 lakh saw a moderate increase. In contrast, the count of taxpayers falling under the Rs 0 to 5 lakh income category saw a decline of over 11% from the previous year and a 17% reduction from 2018-19.

The Fall In Rs 0-5 Lakh Income Category  

Another important aspect to consider is the decline in the number of individuals falling under the Rs 0-5 lakh category. Although this bracket still constitutes two-thirds of individual taxpayers, the number has dropped to 65% in the fiscal ended March 2021 from 74% a year earlier.

Reasons 

While there is no clear reason for the shift in income levels, one of them could be the rise in the number of gig workers and employees moonlighting for other projects.

“It could be that these people (Rs 0-5 lakh) category have opted out of the formal workforce. It’s possible that these people are entering the workforce through informal channels and they could either be freelancing or be doing gig work, it won’t show up as salaried income,” according to Rituparna Chakraborty, co-founder and executive director at TeamLease Services. 

Sectors like aviation, hospitality, food and beverages saw big job cuts during the pandemic, whereas sectors like technology, e-commerce, software as a service (SaaS) witnessed a boom.  

“The other possibility could be the salary revision. The people who were already in the job market, some of them might have moved up from Rs 0-5 lakh to the Rs 5-10 lakh bracket,” said Chakraborty.  

The salary revision of technology sector employees and higher compensation might be more notable since it came after a lull of two years during the pandemic, she said.