Personal Income Tax Overtakes Corporate Levy for First Time in India: JM Financial Report

In a landmark shift, personal income tax collections have surpassed corporate taxes for the first time in India’s history, according to JM Financial Institutional Securities. The transition reflects stronger compliance, widespread formalisation, and the digital transformation of India’s tax system.

The report highlights that personal income tax accounted for 53.4% of total direct taxes in FY24, up from 38.1% in FY14. Meanwhile, the share of corporate taxes declined from 61.9% to 46.6% during the same period.

India’s taxpayer base has expanded sharply over the past decade. The number of individuals filing returns rose 2.3 times — from 30.5 million in FY14 to 69.7 million in FY23. Factoring in those paying through TDS without filing, the taxpayer pool nearly doubled, reaching 99.2 million.

Compliance measures have also strengthened significantly. TDS collections more than doubled, climbing from Rs 2.5 trillion in FY14 to Rs 6.5 trillion in FY24. Advance tax payments surged nearly fourfold, from Rs 2.9 trillion to Rs 12.8 trillion, making these channels account for more than half of total direct taxes.

Also read: Tax practitioners seek rationalisation of personal Income Tax from government | Republic World

The rollout of Goods and Services Tax (GST) in 2017 has further reinforced compliance by creating a digital trail. GST’s invoice-matching mechanism and integrated data systems allow authorities to cross-check income declarations, reducing evasion. The number of registered GST taxpayers grew from 12.4 million in 2019 to 14.7 million in 2024, pulling more businesses into the formal net.

JM Financial concludes that the rise of personal income tax marks a structural change in India’s fiscal framework, reshaping the balance between individuals and corporations in direct tax contributions.

Personal income tax collections have also been buoyed by rising declared salaries, which grew from Rs 9.8 trillion in FY14 to Rs 35.2 trillion in FY23, a 15 per cent CAGR. Over the same period, personal tax collections increased from Rs 2.4 trillion to Rs 8.3 trillion.

Direct tax to GDP ratio improved from 3.2 per cent in FY01 to 6.6 per cent in FY24. However, still only 6.9 per cent of India's population pays income tax compared to nearly 50 per cent in developed economies.