India's New Crorepatis

Over 100,000 new crorepati taxpayers have emerged in India in three years.

The New wave of crorepati taxpayers spans legacy investors, fresh entrants in the futures and options space,  successful startup founders and executives in select companies and sectors.

Key Reasons for the surge in Crorepati Taxpayers 

• Booming stock market

• Robust profits and large bonus payouts in select companies 

• Aggressive talent poaching with salary hikes

• Stringent tax enforcement 

• Dividends getting taxable in the hands of individuals (since FY 2020-21)

The new rule of taxing dividends at the individual -

Rather than the corporate level has driven numerous CEOs and senior executives across sectors into the ₹1 crore-plus tax bracket.

India is now home to more than 220.000 people with a taxable income of over ₹1crore. This is a staggering five-fold increase over the past decade. Even more dramatically, 100,000 of them joined the group of high earners in just three years, since the onset of the Covid pandemic. Who are newcomers to this bracket of super-rich Indians.

Rise of the Rich

In assessment year 2013-14,corresponding to FY2012-13, India had around 40,000 individuals reporting a taxable income of more than ₹1 crore, according to recent SBI Research report that sourced its raw data from the income -tax department. By AY 2020-21 (FY2019-20) which remained largely unaffected by the pandemic, the number of crorepati taxpayers climbed to 120,000,with a modest increase to 130,000 the following year. A sharp rise in the number of super-rich Indians in the ₹1 crore-plus bracket was observed only in AY2022-23 and AY 2023-24, reaching 190,000 and 220,000, respectively, according to the same data set.

"There is a demand for talent, with requisite experience and skills, in rapidly expanding industries such as AI-based tech sector, green energy, professional services, startups in emerging areas travel and hospitality and real estate," 

Senior executive have also greatly benefited from a surging stock market, with the BSE Sensex leaping from 29,000 at the end of FY2019-20 to 73,000 by March-end 2024.

"After Covid, the great resignation wave hit corporates, which forced them to increase remuneration by 20-30%mid - year, and it also contributed to several salaried income taxpayer going above the crore mark,".

High corporate profitability, along with large bonus payout in recent years, has swelled the number of individuals in the crore-plus income pool.

(Source :ET)