Chart of the Day: Indians are paying the price for a porous income tax net, as governments have shifted to indirect taxes such as the Krishi Kalyan Cess to collect money. India has among the worst coverage in the world when it comes to income tax payees. Less than 2% of the population actually ends up paying income tax, and the bulk of these are salaried professionals.
Comparable countries like Brazil and China have much higher income tax coverage - in Brazil over 50% of the population pays income taxes, while in China thanks to recent reforms, such income taxes are paid by over 20% of the country's people.
Just a little over 18,000 people in the country have filed tax returns stating they have incomes over Rs. 1 crore. This is hard to fathom especially when looking at the number of luxury car sales in India, which has not just been growing, but stood at over 31,000 cars sold last year from just the big three - BMW, Audi, and Mercedes. Without reforms indirect taxes will only continue to ramp up, the kind of taxes that hit the middle class the hardest.
