The wealthiest in India record much lower incomes in relation to their wealth, according to an analysis based on income-tax statistics, Forbes’ rich list, and the affidavits of Lok Sabha election candidates. A sizable portion of the capital income of wealthy groups does not make it into the income tax data, according to study by Ram Singh, director of the Delhi School of Economics and member of the RBI’s Monetary Policy Committee, which determines interest rates.
According to the research, the percentage of income tax paid in relation to wealth decreases with increasing taxpayer wealth. “The highest earners owe roughly 1% of their wealth in income taxes. The tax liability for the richest 0.1% of people is roughly 0.7% of their wealth, according to the report.
The data shows that the rate of return on assets is far higher than the reported income-wealth ratios of the wealthiest classes. The study found that for every 1% increase in family wealth, the reported income-wealth ratio decreases by an average of more than 0.6%.
“Do the Wealthy Underreport Their Income?” is the title of the study. Tax evasion is a major factor in the low income-wealth ratios seen among the ultra-wealthy, according to “Using General Election Filings to Study the Income–Wealth Relationship in India.” It claims that the tax system in India is not wealth-progressive.
According to the study, those of us who are subjected to scrutiny from the media and civic society are more motivated to disclose our incomes honestly.