A recent analysis has uncovered a growing concern: India’s wealthiest individuals are reporting far less income than their actual wealth suggests. Despite being listed among the richest in the country, many of the ultra-wealthy seem to be avoiding full income disclosure, raising serious questions about tax transparency and income reporting in India.
Big Gaps Between Wealth and Declared Income
The study combines insights from Lok Sabha election affidavits, the Forbes rich list, and income-tax data, and the results are striking. According to the research, the capital income of many super-rich individuals isn’t reflected in income-tax records.
The wealthiest in India report disproportionately low incomes, hinting at widespread underreporting and tax avoidance.
The research, conducted by Ram Singh, who is both a member of the RBI’s Monetary Policy Committee and a professor at the Delhi School of Economics, presents compelling evidence in a paper titled ‘Do the Wealthy Underreport Their Income?’
Tax Avoidance and Systemic Loopholes
The study points to tax avoidance as a major reason for the low income-wealth ratios found among India’s ultra-wealthy. It also highlights that India’s tax regime lacks progressiveness when it comes to wealth, allowing wealthier individuals to legally sidestep taxes that middle-income groups cannot avoid.
The current system seems to favour the wealthy, enabling them to pay proportionately less tax than the average citizen.
Public Scrutiny Makes a Difference
Interestingly, the research notes that those frequently in the public eye—such as politicians or media-exposed individuals—tend to report their income more honestly. Being under civil society scrutiny appears to act as a check against underreporting.
The Bigger Picture
This study sheds light on the long-standing issue of wealth inequality and tax fairness in India. As conversations around economic justice grow louder, the findings raise an important question: Is India doing enough to ensure its wealthiest citizens contribute their fair share?
