Only 4 Crore Indians (3% population of India) Pay Income tax

Only 4 Crore Indians; or 3% of the India's total (125+ Crore) population; pays income tax.

There is nothing shocking about this.
Lets try to understand how have we arrived at this data...

Out of the 125 crore people, only 50 crore people who are working.

Of these almost 50% are employed in agriculture - That is pretty much exempted from income tax.

That leaves only about 25 crore workers who work in factories and the service sector.

To pay income tax you need to be earning Rs. 2.5 Lakhs or more per year.

Lets look at some stats to find out that how many people earn that amount of money in India:

From above data, we can conclude that less than 20% of 25 Crore people earn Rs. 2.5 Lakhs or more per year. That number is not more than 4 crore people.

So, its these 4 Crore Indians who earn Rs. 2.5 Lakhs or more per year, and file/pay the income-tax to the government.

News article:

Less than 3 percent file income tax return in India

Source:

Question: https://www.quora.com/How-is-it-possible-that-only-3-of-Indians-pay-income-tax

Answer given by: https://www.quora.com/profile/Balaji-Viswanathan-2