No, Two States did not Pay 53% Tax

Income Tax Department released some interesting dataset for AY 12-13 yesterday aggregating key numbers from IT Returns. My analysis is available here.

Today, you may have woken upto reports how 2 states paid 53% of total Income Tax collection, with Maharashtra alone accounting for over 39%. This blog seeks to put that misleading statistic to rest.

Under Income Tax law, profits are taxed where the assessee earns them. For corprates, this means the place where 'control' resides. In practice, corporate tax gets accounted where the registered office is.

So Reliance Industries generates cash in Gujarat and off-Andhra coast. However, since the Registered Office is in Mumbai, the tax payments are recorded as collected in Mumbai.

Analaysing Income Tax data for AY 12-13

Income Tax Department has now released some interesting data summarising tax returns for AY 12-13 . We now know that 1.21 crore assessees paying less than Rs. 1.5 lakhs in income tax contributed a mere 6.7% of total Income Tax collection. Meanwhile, 13,689 Companies paying tax above Rs 1 crores accounted for 59% of total income tax collection. This datapoint alone should be sufficient to re-evaluate our whole approach to taxation.

Some more details from analysing the data:

Only 6 assessees reported salary income above Rs. 50 crores in AY 12-13. Analytical chart has 2 more rows after 50-100 crore slab, salary income Rs 100-500 crores, and > 500 crores. Both rows are empty.

2 assessees with House Property income in the range Rs 100-500 crores. No one above 500 crores.

205 assessees with business income exceeding Rs 500 crores.