Make Income Taxpayers' Honesty A Badge of Honour

News18

17-07-2025

In the age of digital governance and transparent taxation, it's time to nurture a 'Pride of Paying' mindset
Recent data from the Income Tax Department starkly reveals that a mere 8,600 individuals report annual incomes exceeding Rs 5 crore.
India, with a population exceeding 140 crore, boasts only about 1.5 crore active income taxpayers. The salaried middle class disproportionately shoulders the tax burden, while professionals, businesses, and high-income groups frequently exploit loopholes to minimise or evade their responsibilities. It is time to recognise that salaried employees—the ones whose taxes are automatically deducted—serve as the backbone of our national revenues. This group deserves acknowledgment and respect, instead of being subjected to a flawed tax system.
The Reality of India's Tax Base
Recent data from the Income Tax Department starkly reveals that a mere 8,600 individuals report annual incomes exceeding Rs 5 crore. Only around 42,800 declare incomes above Rs 1 crore, and a disappointing 2,200 professionals—doctors, lawyers, and chartered accountants—acknowledge earnings of Rs 1 crore or more. In stark contrast, 4 lakh individuals earning above Rs 20 lakh contribute to 63 per cent of all personal income tax collections. This is unacceptable in a nation where less than 1 per cent of the population actually pays income tax.
The reality is that 99 per cent of India's tax-paying individuals feel compelled to file Income Tax Returns (ITRs), typically paying only a minimal amount of tax for various reasons. The salaried class is the primary contributor because they cannot hide from their obligations; taxes are deducted at source (TDS). Meanwhile, large agribusinesses and political parties evade their responsibilities entirely. Prime Minister Narendra Modi himself pointed out in February 2020 in a summit that only 1.46 crore individuals are liable to pay income tax, representing a shocking less than 1 per cent of the total population.
For the fiscal year 2023-24, total gross tax revenue collection was Rs 34.65 lakh crore, with income tax contribution being Rs 10.45 lakh crore or 30.16 per cent of total revenue receipts. Additional contributions include corporate tax at Rs 9.11 lakh crore (26.30 per cent), GST at Rs 9.57 lakh crore (27.62 per cent), union excise duties at Rs 3.09 lakh crore (8.92 per cent), customs duties at Rs 2.33 lakh crore (6.73 per cent), and service tax at Rs 420 crore (0.0121 per cent).
This lopsided contribution is the result of systemic injustices. Salaried employees have no escape routes; taxes are deducted automatically, while non-salaried individuals exploit deductions for travel, rent, and various expenses. Wealthy farmers and political parties remain entirely outside the tax system. Despite their crucial role in sustaining government revenues, honest taxpayers—especially those in salaried positions—are unjustly overlooked, leading to disillusionment and decreasing compliance.
Recognise and Reward
India has long struggled with low voluntary tax compliance. While the nation has made great strides in digitising tax systems and cracking down on evasion, there's still one crucial aspect missing in our public policy approach—a culture of respect and honour for the honest taxpayer.
The current tax ecosystem in India is perceived as coercive and unjust. Honest taxpayers feel undervalued while evaders escape unscathed. It's time for a dramatic course correction. We must reform not only our tax policies but also the way we perceive taxation. By recognizing honest top taxpayers as civic champions and rethinking our tax structure, we can establish a system anchored in fairness, aspiration, and transparency.
Over 8.2 crore individuals filed income tax returns, roughly 5.5 lakh individuals declared incomes above Rs 10 lakh. Clearly, a tiny fraction of Indians is shouldering a large part of the nation's tax burden. This means a reliance that underscores the need to incentivise honest and consistent taxpayers not just with rebates, but with public recognition and social honour.
India can take a cue from Japan, where the National Tax Agency hosts annual ceremonies recognising 'Exemplary Taxpayers" with mayors and governors attending. In South Korea, outstanding taxpayers are publicly honoured on National Taxpayers' Day with government medals, and even automatic immigration clearance privileges at airports.
India must establish a multi-tiered, transparent system to publicly honour its top taxpayers. Recognition should be given annually at the ward, city, district, state, and national levels, across four categories such as: Highest taxpayer-Salaried Individual, Entrepreneur/Business Owner, Professional and Consistent higher taxpayer over a five years.
The higher taxpayers' names and their concise profile should be published in annual bulletins of the Income Tax Department situated in the states and central level and honoured during national events like Independence Day, Republic Day or Taxation Day.
They could be given distinction certificates and badges designating them as 'Proud Taxpayer of ward/city/state/country, PAN or Aadhaar-linked verification tags could be permitted to place on their vehicles. Priority access to civic utilities and public services as a courtesy measure, not entitlement.
Such recognitions won't cost the exchequer much, but the psychological and cultural returns will be enormous. When society begins to see tax compliance as a badge of honour, it will shift public sentiment from cynicism to pride.
This can be particularly influential among younger professionals and first-generation entrepreneurs, who often equate taxes with red tape or inefficiency. Public honour can transform compliance into an aspiration.
Further, honest taxpayers should be nominated to local governance forums and reform committees, not as rewards, but as trusted stakeholders in the nation's development process. After all, they fund the very systems they seek to reform.
We have blood donors, organ donors, and martyrs of national service. Why not celebrate those who contribute quietly but significantly to the financial lifeblood of the country?
In the age of digital governance and transparent taxation, it's time to nurture a 'Pride of Paying" mindset. Let the Income Tax Department not just be a collector, but a conductor of civic celebration, spotlighting the citizens who are the most silent yet consistent enablers of India's growth. Honest taxpayers don't ask for exemption. They deserve acknowledgement.
The writer is a co-founder and MD of Orane International, a training partner with National Skill Development Corporation (NSDC), and a network member of India International Skill Centres (IISCs), an initiative of GoI. Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect News18's views.
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