17.18        ndian     onom
     India’s direct tax collection is not commensurate    about 1.09 crore accounts saw average deposit
     with the income and consumption pattern of the       between Rs. 2 to 80 lakh. Deposits of more than
     people:                                              80 lakh were made in 1.48 lakh accounts with
     Corporate tax: As against 5.6 crore informal sector  average deposit size of Rs. 3.31 crores. This data
     (unorganised sector) individual enterprises and      mining will help the Government in increasing
     firms doing small business, of which 1.81 crore      the tax net and tax revenue in future.
     filed tax returns. Out of the 13.94 lakh companies        The above-given data can be contrasted with
     registered in India, 5.97 lakh filed tax returns     the fact that in the last five years, more than
     for 2016-17 (Assessment Year) which show the         1.25 crore cars have been sold, and number
     following annual profit before tax pattern:          of Indian citizens who flew abroad, either for
               2.76 lakh companies have shown losses or   business or tourism, was 2 crore in the year 2015.
               zero income.                               From all these figures it can be concluded that
                                                          India is largely a tax non-compliant society. The
               2.85 lakh companies had less than Rs. 1
                                                          predominance of cash in the economy makes it
               crore profit.
                                                          possible for the people to evade their taxes. When
               Profit of 28,667 companies was between     too many people evade taxes, the burden of their
               Rs. 1 crore to Rs. 10 crore, and           share falls on those who are honest and compliant.
               Only 7781 companies have profit of more
                                                          Impact of Demonetization: As per the Economic
               than Rs. 10 crores.
                                                          Survey 2017-18, one of the aims of demonetization
     Individual income tax: As against estimated          and the GST (Goods and Services Tax) was to
     4.2 crore persons engaged in organised sector        increase the formalization of the economy and
     employment, the number of individuals filing         bring more people into the income tax net, which
     return for salary income are only 1.74 crore. In     includes only about 59.3 million individual
     2015-16 (Assessment Year 2016-17), a total of 3.7    taxpayers (filers and those whose tax is deducted
     crore individuals filed income tax returns which     at source in 2015-16), equivalent to 24.7 per cent
     did show the following annual income pattern:        of the estimated non-agricultural workforce.
               99 lakh show annual income below the            It looks happening! In 13 months from
               exemption limit of Rs. 2.5 lakh;           demonetisation (November 2016 to November
               1.95 crore show income between Rs. 2.5     2017) 10.1 million new income tax filers were
               to Rs. 5 lakh;                             added (in the preceding 6 years only 6.2 million
               52 lakh show income between Rs. 5 to       new income tax filers were added). Though, the
               Rs. 10 lakhs;                              new tax filers, in many cases reported income close
               Only 24 lakh people show income above      to tax threshold (standard deduction) of Rs. 2.5
               Rs. 10 lakhs;                              lakhs per annum. As the income growth of such
               76 lakh people declared income above Rs.   tax filers crosses the threshold, tax revenue of the
               5 lakh (56 lakh being salaried class); and Government will also grow.
               Only 1.72 lakh people did show income
               more than Rs. 50 lakh.
                                                             lookinG ahead
          The demonetisation process has given the        Tax reform has been an integral part of the economic
     government new data related to people’s income—      reform process in the country. Much reforms have