The State Bank of India (SBI) has recently revealed some good news in their report – it seems that income inequality in India has been falling between FY2014 and FY2022.
New Delhi: The State Bank of India (SBI) recently shared a report indicating a notable decrease in income inequality across India in the time frame of FY2014–22. As per the SBI report, there’s been a significant shift where about 36.3% of tax contributors climbed from the lower income bracket to a higher one. This increase between brackets has boosted the income of these individuals by 21.3%. The research employed public income tax data for the first time to gauge estimates of the inequality gap in the Indian landscape. The emergence of such trends brings a sliver of hope towards trimming income disparity and enhancing the financial health of individuals nationwide, as per a report by news agency IANS.
ITRs Filed By Individual Taxpayers
According to the recent data, the ITRs filed by individual taxpayers earning between Rs 5 lakh and Rs 10 lakh climbed by 295 per cent in the assessment years (AY) 2013–14 and AY 2021–22, showing a positive trend of migration to a higher range of gross total income, the report states.
The number of ITRs filed by people earning between Rs 10 lakh and Rs 25 lakh has increased by 291 per cent. The total number of persons filing income tax increased to 74 million in AY23 from 70 million in AY22. For AY24, 82 million ITRs had been filed by December 31, ’23.
Top 2.5 per cent of Taxpayers’ Contribution In Income Declined
The report also points out that the top 2.5 per cent of taxpayers’ contribution in income has declined from 2.81 per cent to 2.28 per cent during FY14-FY21 which means that the other taxpayers are contributing more.
Another sign of upward mobility is that 19.5 per cent of small firms have transitioned into larger firms through MSME value chain integration and consumption of the bottom 90 per cent of population has increased by Rs 8.2 lakh crore post-pandemic, according to the report
Gini Coefficient Data Outcomes
The Gini coefficient, which is a measure of income inequality, was calculated using ITR (Income Tax Return) data on the taxable income of individuals. The estimate shows that individual income inequality has significantly declined from 0.472 to 0.402 during FY14–FY22, the report states. The Gini coefficient measures inequality on a scale from 0 to 1, with higher values indicating higher inequality.
(With inputs from agencies)