India releases income tax data after Piketty criticism

Only about two percent of Indians filed income tax returns in 2013, long-awaited official data showed Friday, highlighting an exceptionally low tax base that constrains public spending in the world’s second-most populous nation.

The government was nudged into releasing the figures after celebrated economist Thomas Piketty in January criticised the difficulty of measuring India’s wealth distribution since New Delhi stopped publishing income tax data in 2000.

Some 28.8 million individuals filed income tax returns in the financial year to March 2013, the most recent for which figures were given—equating to about 2.3 percent of India’s 1.25 billion population.

In the biggest group of taxpayers, two million Indians declared average annual earnings of 694,000 rupees (£7,000), the data showed.

The returns are noticeably sparse at the high end, with just six individuals declaring average income of £7 million in the top-earning group.

India has at least 84 billionaires, according to Forbes magazine.

It suggests a searing shortfall in the amount of income tax paid by the very rich in India, a vastly unequal country where much of the wealth is concentrated in the hands of a few.

Prime Minister Narendra Modi’s government has stepped up efforts to crack down on illicit income and assets known as “black money”, often stashed abroad in the form of property or in undisclosed bank accounts.

“Our Govt. has taken the landmark decision of publishing the income tax data. It is a big step towards transparency & informed policy making,” Modi said on Twitter yesterday.

“Am sure this data will be used by researchers & analysts & lead to enhanced insights for policy making on taxation,” he tweeted.

The amount of direct taxes collected in the year 2015-16 equated to just 5.47 percent of GDP, the lowest level in nine years, provisional figures showed.

Piketty, author of the bestselling Capital in the Twenty-First Century, in January blasted India for its “extreme lack of transparency” on income tax data.