The Income Tax Return Statistics released by the Income Tax Department for Assessment Year 2015-16 has revealed that more than 30,000 taxpayers earned over Rs 1 crore, whereas just 5 individuals had income in the range of Rs 100 - Rs 500 crore.
The number of individuals earning a salary income between Rs 1 crore to Rs 5 crore is at 28,919, while 1,228 taxpayers declared salaries ranging from Rs 5 crore to Rs 10 crore. There were 346 individuals with salary over Rs 10 crore but less than Rs 25 crore.
The contribution of direct taxes in the total tax collection in 2016-17 has fallen below 50 per cent to 49.66 per cent for the first time since 2006-07. This is despite a 15 per cent growth witnessed in the direct tax collection during the year. In the previous year, the contribution of direct taxes was 51 per cent of the total tax collection.
Data released by the Central Board of Direct Taxes (CBDT) shows direct tax collection in 2016-17 was Rs 8.5 lakh crore compared to Rs 7.42 lakh crore in the previous year. The indirect tax collection in 2016-17 was Rs 8.6 lakh crore.
The proportion of direct tax in total tax collections has been falling for the last couple of years. Direct tax collections as a percentage of total tax collection was 56.32 per cent in 2013-14, 56.16 per cent in 2014-15 and 51.03 per cent in 2015-16.
The central government's decision to set up a seven-member committee to overhaul Direct Tax Code (DTC) may simplify the taxation slabs and reduce rates. The final DTC would also likely benefit the tax payers by increasing the exemption limit to Rs 5 lakh. Though the taxable amount may go up due to removal of all or most of the exemptions, the reduced tax rates are expected to actually bring down the total amount paid as income tax.
The direct taxes have been in force in the country since 1961. The latest decision comes close on the heels of comments made by Prime Minister Narendra Modi during the annual conference of tax officers in September that the Income-tax Act, 1961, was drafted more than 50 years ago and it needed to be redrafted.
"Accordingly, in order to review the Act and to draft a new direct tax law in consonance with economic needs of the country, the Government has constituted a task force," a finance ministry statement said on the formation of the new task force.
The task force is headed by Arbind Modi, Member (legislation), CBDT. Arvind Subramanian, Chief Economic Adviser, will be a permanent special invitee in the Task Force. Other members of the of the task force include Girish Ahuja, practicing chartered accountant and non-official Director of State Bank of India; Rajiv Memani, Chairman & Regional Managing Partner of E&Y; Mukesh Patel, Practicing Tax Advocate, Ahmedabad; Mansi Kedia, Consultant, ICRIER, and G C Srivastava, retired IRS (1971 Batch) and Advocate.
The task force would draft direct tax laws in line with tax laws prevalent in other countries, incorporating international best practices, and keeping in mind the economic needs of the country. The task force would submit its report to the government within six months.
The Modi government, since assuming power in 2014, has already implemented general anti-avoidance rules GAAR. Finance Minister Arun Jaitley also promised in 2016 to lower corporate tax rate to 25 per cent during the course of 5 years. As of now, individual taxpayers with an annual income up to Rs 2.5 lakh are exempt from paying income tax.