A paper studying national accounts found Wealthier Indians tend to report less income relative to their wealth, suggesting possible under-reporting.
The richer a household is, the lower its income-to-wealth ratio becomes.
A 1% increase in wealth is linked to a 0.6% decrease in reported income-to-wealth ratio.
This pattern holds true for all forms of reported income, including taxable and capital income.
For India’s richest families, reported income is often just 1/12th of their wealth.
This points to potential income concealment aimed at tax avoidance.
As a result, wealthier individuals may pay proportionally less in income taxes — a regressive trend.
Income from equity increases both wealth and income, but ownership of land and commercial property doesn’t reflect this trend.
This anomaly suggests under-reporting of rental income and misuse of farm income exemptions.
MP affidavits also reveal under-reporting patterns, except in candidates with high chances of winning.
Stronger scrutiny from media and officials leads to more accurate income reporting in such cases.
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