SBI Study reveals 74.2% decline in income disparity since FY14

A recent report by State Bank of India ( SBI ) has highlighted a significant reduction in income disparity for individuals earning up to  Rs 5 lakh annually, with a cumulative decline of 74.2 per cent between fiscal years 2013-14 and 2022-23. study, conducted by SBI's Economic Department, aims to counter prevailing notion of worsening inequality in India.

By analysing income disparity curves from assessment years 2014-15 and 2023-24, report notes a clear rightward shift in income distribution curve, indicating that individuals in lower income brackets are increasingly improving ir earnings. "Our analysis shows that re has been a cumulative 74.2 per cent decline in income disparity for those earning up to ₹5 lakh, reflecting government's ongoing efforts to uplift bottom of pyramid," report states.

Specifically, share of individuals earning up to Rs 3.5 lakh has dropped from 31.8 per cent in FY14 to 12.8 per cent in FY21, demonstrating a substantial 19 per cent increase in income relative to ir population share. report also mentions that lower income group (earning less than Rs 5.5 lakh) has experienced positive growth rates over last dece, aside from a dip during COVID-19 pandemic.

study highlights a shift in income tax contributions, noting that states like Maharashtra, Delhi, Gujarat, and Karnataka are reaching saturation in income tax filings, with Uttar Presh emerging as a leer in expanding its income tax base, followed by Bihar, Andhra Presh, Punjab, and Rajasthan.

ditionally, report indicates that contribution of direct taxes to total tax revenue has increased to 56.7 per cent in assessment year 2024, highest level in 14 years. direct tax-to- GDP ratio has also risen to 6.64 per cent, highest since 2000-01, underscoring improvements in tax compliance.

Income Tax Returns (ITRs) filed in AY24 reached approximately 8.6 crore, a substantial increase from 7.3 crore in AY22, with 79 per cent of returns submitted on or before due date. proportion of late-filed returns has fallen from 60 per cent in AY20 to just 21 per cent in AY24, reflecting enhanced compliance among taxpayers.