Average Income Of Middle Class Indians Triples In Last 10 Years: SBI Research

The average income of middle-class Indians has grown from Rs 4.4 lakh in financial year 2012-13 (FY13) to Rs 13 lakh in FY22, according to SBI Research titled ‘Deciphering Emerging Trends in ITR Filing report, as cited by Moneycontrol.

The SBI report has cited two reasons behind this — many taxpayers have transitioned from the lower income group to the upper income group, thereby bumping up the average and there has been a fall in the number of return filers with zero tax liability.

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Middle class has transitioned over the years

The report further sheds light on the transition of the lower middle class to higher income levels in the last ten years. 

It further revealed that around 84% of the 16 million people who filed tax returns belonged to the income group of up to Rs 5 lakh in FY11. However, only 64% of the 68.5 million ITR filers belonged to this income bracket, by FY22.

This means that around 13.6 million people had left the lower income strata and migrated upwards by FY22. 

Another positive thing the report highlighted is that there has been a significant decline in the number of zero-tax liability returns, which means an individual's taxable income falls below the basic exemption limit and he/she is not liable to pay any tax. The share of such ITRs has gone down from 84.10 percent in FY11 to 64 percent by FY22.

The report further states that the average income is also expected to grow up further to Rs 49.70 lakh by 2047, led by combination of more tax filers and a shift in the distribution of tax filers from the lower to the higher income group.

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It further added that at least 25% of the ITR filers are expected to leave the lowest income strata (annual income of up to Rs 5 lakh) by FY47.

The Indian workforce is also expected to leapfrog from 530 million in FY23 to 725 million by FY47, which further means that there will be a rise in the number of tax filers, expected to go up from 70 million in FY23 to 482 million by FY47.