The number of high-income taxpayers in India is growing rapidly, with over 2.2 lakh people now reporting taxable income of over ₹1 crore annually. The number has grown nearly fivefold in the past decade. 1 lakh new people have joined the category in the past three years following the Covid-19 pandemic.
There are a number of reasons behind this increase, including a boom in the stock market, strong profits in some sectors and a strong demand for talent, which has led to higher salaries.
Former chief statistician and economist Pranab Sen says, “Not all sectors were affected equally during the pandemic. While small and medium industries were affected, large companies remained profitable, which benefited their top officials.”
The massive surge in the stock market has been a major reason. The BSE Sensex has grown from 29,000 in March 2020 to over 73,000 by March 2024, leading to a massive increase in investor returns.
According to Sudhir Kapadia, senior consultant at EY, the new crorepati taxpayers include investors, successful startup founders and senior executives of top companies.
Changes in tax rules have also fueled this growth. The tax regime on dividends has been changed from the financial year 2020-21 and now dividends are taxable at the individual level and not at the company level.
This has resulted in many top executives and businessmen earning more than ₹1 crore. After the abolition of Dividend Distribution Tax (DDT), the number of crorepati taxpayers increased by 46% in just one year.
Sectors like AI, Green Energy and Real Estate are witnessing rapid growth in salaries, where there is a huge demand for experts. Vikas Vasal, National Managing Partner, Grant Thornton India, says, “Salaries in these sectors are growing by 20-30%, which is increasing the number of crorepati taxpayers.”
Experts are divided on the way forward. While experts like Vikas Vasal believe this growth will continue, former CBDT chief R. Prasad and Sudhir Chandra say the pace may gradually slow down as many wealthy Indians are now moving to tax-friendly countries like the UAE.
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