SBI report: Average income of middle-class Indians nearly tripled over the past decade
The report notes that in FY11, among the 16 million individuals who filed tax returns, approximately 84% fell within the income bracket of up to Rs 5 lakh. However, this proportion changed by FY22, with only 64% of the 68.5 million ITR filers belonging to this income category.
A State Bank of India Research report titled 'Deciphering Emerging Trends in ITR Filing' has revealed the growth in the average income of middle-class Indians over the past decade. In the financial year 2012-13 (FY13), the average income was Rs 4.4 lakh, which has risen to Rs 13 lakh in FY22. This report also highlights the transformation of the lower middle class into higher-income segments within this timeframe.
The report notes that in FY11, among the 16 million individuals who filed tax returns, approximately 84% fell within the income bracket of up to Rs 5 lakh. However, this proportion changed by FY22, with only 64% of the 68.5 million ITR filers belonging to this income category. This indicates that over the years, 13.6% of the population transitioned from the lower-income group to higher levels by FY22.
Furthermore, a positive trend is the reduction in the number of tax returns with zero tax liability. These are cases where an individual's taxable income remains below the basic exemption limit, leading to no tax obligation. The percentage of such ITRs declined from 84.10% in FY11 to 64% by FY22.
The report predicts a promising future, with the average income anticipated to further increase to Rs 49.70 lakh by 2047. This growth will be driven by a combination of more individuals filing taxes and a shift in the distribution of tax filers from the lower to the higher income brackets.
Additionally, SBI Research estimates that around 25% of ITR filers will move out of the lowest income strata (annual income up to Rs 5 lakh) by FY47.
Looking ahead, the Indian workforce is projected to surge from 530 million in FY23 to 725 million by FY47. Consequently, there will be a notable rise in the number of tax filers, expected to increase from 70 million in FY23 to 482 million by FY47.