Modi’s Tax Reforms Boost High-Income Filers, Ease Middle-Class Burden

Over the past decade, tax policies under Prime Minister Narendra Modi’s administration have led to a significant shift in the income tax landscape, with a notable increase in the number of high-income individuals declaring annual earnings above Rs 50 lakh. This change has enabled a reduction in the tax burden on India’s middle class, defined broadly as those with incomes below Rs 20 lakh per year, according to official sources.

Rise in High-Income Tax Filers

Data from the Income Tax Department reveals that the number of individuals reporting an annual income exceeding Rs 50 lakh grew to over 9.39 lakh in 2023-24. This figure represents a substantial five-fold increase from 1.85 lakh high-income filers in 2013-14. Concurrently, the tax revenue generated from these high-income earners has also surged, from Rs 2.52 lakh crore in 2014 to Rs 9.62 lakh crore in 2024, reflecting a 3.2 times increase.

Sources attribute this rise in high-income tax declarations to stronger anti-tax evasion measures and the Modi government’s laws against black money. These changes have resulted in high-income earners now contributing 76% of India’s total income tax collection, significantly easing the tax load on lower and middle-income brackets.

Reduced Tax Burden on Middle-Class Taxpayers

During this period, the income tax burden on individuals earning less than Rs 20 lakh per year has seen a noticeable decrease. Middle-class taxpayers have benefited from exemptions and deductions introduced by the Modi administration, which increased the tax-free income threshold from Rs 2 lakh in 2014 to Rs 7 lakh in 2024. In fact, the percentage of tax collected from individuals earning under Rs 10 lakh has dropped from 10.17% of total tax revenue in 2014 to just 6.22% in 2024.

For individuals earning between Rs 2.5 lakh and Rs 7 lakh annually, average tax liability is now around Rs 43,000, which amounts to about 4-5% of their income. This rate is among the lowest for emerging economies, according to official data. Taxpayers in the Rs 10-20 lakh income range have experienced nearly a 60% reduction in tax liability when adjusted for inflation, making a noticeable difference in disposable incomes for this group.

Increase in Overall Tax Filers

India has also seen a sharp rise in the total number of income tax returns filed, from 3.60 crore in 2013-14 to 7.97 crore in 2023-24—an increase of 121%. This expansion reflects both economic growth and more extensive tax compliance efforts by the government.

These shifts underscore the Modi administration’s focus on widening the tax base while reducing the relative tax burden on lower and middle-income groups, helping promote financial relief and equity within the Indian tax system.