GUWAHATI: India’s richest households underreport their income relative to their wealth, according to a research paper authored by Delhi School of Economics Director Ram Singh, who is also an external member of the Reserve Bank of India’s Monetary Policy Committee (MPC).
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The study, titled Do the Wealthy Underreport Their Income? Using General Election Filings to Study the Income–Wealth Relationship in India, draws on data from general election affidavits, Forbes’ list of billionaires, and personal income tax (PIT) records from the Central Board of Direct Taxes (CBDT).
Singh found that the top 0.1% of Indian households report incomes that amount to just 8% of the national average income-to-wealth ratio. Additionally, Forbes-listed families officially disclose only one-twelfth of the income an average Indian household would report if it had the same level of wealth.
According to the paper, this underreporting is not isolated but reflects a systemic pattern where the country’s wealthiest individuals appear disproportionately low-income on paper. Singh further argues that the wealthy not only report less income but have also shaped how income is defined within India’s tax framework, thereby minimising their tax liabilities.
The study further notes that the bottom 10% of families reported incomes amounting to over 188% of their wealth, while the richest 5% and 0.1% reported incomes of only 4% and 2% of their wealth, respectively. For the wealthiest Forbes families, the reported income was less than 0.6% of total wealth.
The findings suggest that India’s tax regime remains regressive in relation to wealth, with the wealthiest 20% showing an income-to-wealth ratio less than one-third of the national average.
