Piketty Calls, Indian Taxman Answers?
Piketty urged India to increase tax transparency and that’s exactly what the CBDT has done.
Little did the French economist, Thomas Piketty know that the Indian government would take his advice so seriously and react so promptly.
In January this year, at a literature festival in Jaipur, Piketty urged the Indian government to increase tax transparency by resuming publication of income tax statistics, something it had stopped doing 15 years ago.
Back then, chief economic adviser, Arvind Subramanian, who debated with Piketty at the same event, had reportedly promised to release the missing data within a year.
It seems Subramanian and the Indian government have acted fast, publishing the data in just a few months after Piketty’s advice.
This month, the Central Board of Direct Taxes (CBDT) published a set of statistics based on income tax returns filed by taxpayers for the assessment year 2012-13.
A few months ago, the CBDT also released data on direct tax collection from financial year (FY) 2000-01 to FY15. According to the data, India’s direct tax collection has increased from Rs 68,305 crore in FY01 to Rs 7.42 lakh crore in FY16.
Maharashtra maintains its lead as the state with the highest direct tax payments with a collection of Rs 2.77 lakh crore in financial year 2014-15. Delhi comes a distant second at Rs 91,247.90 crore in the same financial year. Karnataka, Tamil Nadu, Andhra Pradesh and Gujarat are the next biggest direct tax contributors.
The contribution of direct taxes to total taxes has increased to 51 percent in financial year 2015-16 from 33.3 percent in FY01. In the course of 15 years, it peaked at 60.78 percent in FY10.
Meanwhile, the direct tax to GDP ratio has increased from 3.25 percent in FY01 to 6.3 percent in FY08 and down to 5.47 percent in FY16. The cost of collecting taxes has reduced, from 1.36 percent in FY01 to 0.62 percent in FY16.
The CBDT will continue to release more data on income tax returns in the coming days.