High-Income Tax Filers Soar Fivefold Under Modi Government’s Tax Reforms

India’s tax regime has witnessed a major shift over the last decade, especially concerning high-income earners. The number of people declaring an annual income of over Rs 50 lakh has increased fivefold during the tenure of Prime Minister Narendra Modi. In 2013-14, only 1.85 lakh individuals fell into this category. By 2023-24, this number had grown to over 9.39 lakh. This surge has also led to a significant increase in tax revenues, with the tax liability of this group rising from Rs 2.52 lakh crore in 2014 to Rs 9.62 lakh crore in 2024 a more than threefold increase.

Today, earners above Rs 20 lakh contribute around 76% of India’s overall income tax revenue. This shift has simultaneously reduced the tax burden on the middle-income group, which includes individuals earning below Rs 20 lakh annually. Their tax load has lessened over time.

The Modi government’s strict measures against tax evasion and black money have been key factors in bringing more high-income individuals into the tax net. Meanwhile, middle-class taxpayers have also benefited from various exemptions and deductions. In 2014, anyone earning above Rs 2 lakh annually had to pay income tax. Now, thanks to policy changes, individuals earning up to Rs 7 lakh per year do not have to pay any income tax.

There has also been a shift in the contribution of lower-income earners to overall tax revenue. In 2014, taxpayers earning less than Rs 10 lakh constituted around 10.17% of total income tax collected. By 2024, their share had decreased to 6.22%. For those earning between Rs 2.5 lakh and Rs 7 lakh, the average tax bill in 2023-24 was around Rs 43,000, or about 4-5% of their income one of the lowest effective tax rates among emerging economies.

For individuals earning between Rs 10 lakh and Rs 20 lakh, their tax burden has dropped by nearly 60% over the last decade, after accounting for inflation.

In terms of scale, India has also seen a substantial increase in the total number of tax returns filed from 3.60 crore in 2013-14 to 7.97 crore in 2023-24, a growth of 121%. This increase reflects not only a broadening of the tax base but also the impact of policies that have lightened the financial burden and simplified tax filing for middle-income earners.