The good news. The Indian economy grew at 6.9% (at factor cost of 2004-05 prices) in 2011-12 while many parts of the world slowed down. The Economic Survey 2011-12 puts per capita net national income (at current factor cost) at Rs 60,972, an increase of 14% from Rs 53,331 in 2010-11.

IndiaSpend’s Prachi Salve looks at the latest report by the government auditor, Comptroller and Auditor General (CAG), and finds that while the economy has been growing, only 2.7% of India’s 1.2 billion population pay tax or only 33.5 million citizens pay income tax, marginally up from 31.3 million tax payers in 2006-07.

Now, some key findings: Direct tax collection has been exceeding budget estimates, and has almost doubled over the years from 2006 to 2011.

Direct tax collected has increased from Rs 2,30,181 crore in 2006-07 to Rs 4,46,934 crore in 2010-11, an increase of 94.2%.

Maharashtra, Delhi and Karnataka account for over 61% of the total direct tax collectedacross the country.

Focus On Direct Taxes

Taxes play two important roles in an economy: first, they are revenue resources that can be utilised for development, and second they help create equality through progressive taxation. Let us look at the five-year data on direct tax collections: