‘Wealthy Indians are under reporting their income to avoid taxes’

• Delhi School of Economics director Ram Singh’s study suggests that rich Indians are likely under-reporting their income.

• The wealthier a household is, the smaller the income it reports relative to its wealth.

• Data from national accounts, income tax statistics, and election candidate filings show that a 1% increase in family wealth is associated with a more than 0.6% decrease in the reported income-wealth ratio.

• The decreasing trend persists for all versions of income reported to tax authorities.

• For a family listed in the 2021 Forbes richest Indians list, income is a mere 1/12th of wealth, likely indicative of income concealment to avoid taxes.

• The study also found anomalies, such as underreporting of farm rent income and abuse of farmland ownership by declaring farm income to escape taxation.

• Lok Sabha MP affidavits showed signs of similar abuse, with candidates with a serious chance of winning showing fewer signs of under-reporting.