More than three-fourth of income tax in the country is collected from assessees with income more than ₹50 lakh at present, even as the tax burden on those earning less than ₹20 lakh has come down significantly over the last decade, indicating relief for the middle class, a senior officer said on Wednesday.

The share of tax contributed by people with income less than ₹10 lakh has also reduced to around 6.22 per cent from 10.17 per cent of the total tax paid in 2014.

Over the past decade, there has been an almost five-times increase in returns filed by those earning above ₹50 lakh, to over 9.39 lakh in 2023-24, the official said. This has been due to strong anti-tax evasion and black money laws implemented by the Modi government, he added.

At the same time, tax liability of individuals in the over ₹50 lakh earning bracket has increased more than three times. “About 76 per cent of income tax collected is from those earning above ₹50 lakh. This has led to reduced tax burden on the middle class.,” the official said.

During the current year, over 75 lakh updated returns have been filed till date, the official noted. This helped the government collect more than ₹8,000 crore. “We are hopeful of exceeding target for income tax during current fiscal,” he said.

Due to an increase in the exemption limit to ₹7 lakh at present from ₹2 lakh in 2014, there has been an increase in ‘Zero Income Tax Filing’ to 4.9 crore in 2024 from 1.8 crore ten years ago. “The percentage of income tax collection from taxpayers earning less than ₹10 lakh reduced to 6.2 per cent of the total tax paid in 2024 from 10.2 per cent in 2014,” he said.

Explaining how the tax burden had reduced for the middle class, the official said that income tax liability of those earning between ₹2.5 lakh and ₹7 lakh pre-2014 was ₹20,000, which is now zero. For those earning between ₹7 lakh and ₹10 lakh, the tax liability in FY24 was ₹43,000, while the number of income tax return filers in this income category was 2.2 crore.

“In other words, total income tax is 4-5 per cent of their income for people having income between ₹7-10 lakh, which is among the lowest tax rates in emerging economies,” he said.

The official noted that after adjusting inflation in the 10-year period, there was an almost 60 per cent decline in tax liability for those earning between ₹10-15 lakh and 40 per cent decrease for those earning ₹10 lakh and ₹20 lakh. “Overall, there is a substantial reduction of tax burden on people earning income less than ₹20 lakh, which is the middle-class group,” the official said.

Overall, there has been a 120 per cent increase in returns filed between 2014 and 2024 from 3.6 crore to 7.9 crore.