Only 2% of Indians Pay Income Tax — Here's Why That Matters
Let’s break it down:
• Total population: ~1.4 billion • Taxpayers: ~57 million (around 4%) • Actual income tax filers: ~28 million (~2% of the population)
Why the gap?
• Agriculture Exemption: 40%+ of the workforce is in agriculture, which is tax-exempt. • Low-Income Earners: 70% of Indians earn below the taxable income threshold. • Tax Evasion: Estimated 30–40% of potential taxpayers avoid filing.
What’s the impact?
• The middle class ends up bearing 70–80% of the nation’s income tax burden. • A limited tax base restricts funding for public infrastructure, healthcare, education, and welfare programs. • It slows long-term development and increases economic inequality.
With rising demands on public spending, a broader tax net and effective reforms are critical for India’s growth trajectory.
