Income Tax Threshold: Middle Class Income set to touch Rs. 50 lakhs in 2047 [SBI Research]

The SBI Research data recently disclosed that Income Tax Threshold limit for Middle Class Income set to touch Rs.5 0 lakhs in 2047. This data report tell that “how an efficient tax system is incubating a healthy, upwardly mobile “Middle Income Class””.

We took a deep dive into what lies beneath the huge treasure trove of IT returns data, that capture and reflect the state of affairs of a society as it aspires to Dream more, Do more, Want more, and Achieve MORE together, as we celebrated the 77th Independence Day, emboldened by the idea of a new India taking wings, ready for the leap of faith to stake claim for a rightful position on a world stage being rescripted constantly by myriad conflicting forces.

Deciphering the data, we understand there is a great story in the making as the Ascent of the Great Indian Middle Income Class is all too visible, poised to propel the country into a Middle Income Economy cohort going forward as the tax filer base, aided by ongoing reforms and confidence building measures coupled with an inspiring economy firing on all cylinders promises to bring to the net 482 million IT filers in FY47 (70 million in FY23), increasing its sharability. The formalisation push of almost 70 million MSMEs promises to appropriately broaden the population.

25% of ITR filers are expected to leave the lowest income strata by FY47 (against 13.6% leaving the lowest income strata between AY 12-AY 23).

Weighted mean income of Rs.4.4 lakh in AY14 (basis ITR returns) has increased to Rs.13 lakh (helped by transition from lower income group to upper income group as also buoyancy in the number of tax-filers who were earlier not reporting income) and further to Rs 49.7 lakhs in 2047 with shifting of distribution of tax-filers from lower income group to upper income group.

Per capita income is predicted to rise from Rs 2 lakh in FY23 to Rs 14.9 lakh in FY47 (in USD terms, this equates to $12,400 in FY 47, up from $2500 in FY 23).

Circulatory migration / skilled workforce upgrading to better opportunities / transitioning to a higher income bucket as the Indian diaspora finds the promises of the new Indian economy profitable enough to collaborate in innovative ways in tandem with inter-state migration needs to be better captured in ITR returns to allow for better framing of policy narratives.

Indian banks, resurgent, strong, capital-healthy, tech-oriented, and embracing best global practises, appear confident and ready to lead the ambitions of this new India and the aspirational Middle Indian class, since it is the mindset that best characterises the Middle-Income Class on the Move.