Salaried crorepatis double in 2 years

NEW DELHI: The number of taxpayers earning more than Rs 1 crore annually has doubled in just two years, thanks to buoyant economic growth. Corpora

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te sales and profits have risen by more than 30% in the last few years. That has encouraged companies to pay record salaries to their top managers, say tax experts.

According to data compiled by income-tax department, the number of salaried taxpayers earning more than Rs 1 crore (Rs 10 million) crossed 5,000 in fiscal 2008 from 2,200 in fiscal 2006. The total number of millionaires is much higher as it includes non-salaried taxpayers.

“Individual earning, especially through bonus and incentives, has seen a stupendous rise recently, especially last year. We can only hope the trend continues in the current fiscal,” said Amitabh Singh, partner at leading audit and consultancy services company Ernst & Young.

However, after two straight years of exponential increase in the number of millionaires, the pace may slow down in 2009-10. India’s GDP grew by 7.8% in the first six months of fiscal 2008 from over 9% in the previous year, and corporate bottom lines have also seen a similar dip. That will put pressure on salaries.

“With the slowdown looming large, it is unlikely that we will add as many crorepati taxpayers in the salaried category in the coming times. Compensations, especially at the senior management levels, had seen stupendous growth largely on account of long-term stocks and performance-linked bonuses. Salaries in this category particularly are expected to remain stagnant, or worse, see a drop. Frills like stock options and performance-linked bonuses will take a beating,” said Gangapriya Chakraverti, leader at HR consulting firm Mercer Consulting India.

The data on millionaires, gathered from employee tax deducted at source (TDS), shows the number of people earning between Rs 50 lakh and Rs 1 crore per annum has also more than doubled. It has increased from 4,400 persons in fiscal 2006 to 10,500 in fiscal 2008. The number of those earning more than Rs 10 lakh also increased to 2.24 lakh in FY08 from 87,000 in FY06.

The majority of Indian millionaires earn between Rs 10 lakh and Rs 20 lakh. In 2007-08, more than 1.5 lakh employees were earning in this income bracket. That is a 250% jump over 2005-06. Given their large number, these millionaires also contributed the maximum to the TDS kitty in FY08. While TDS from those earning more than Rs 1 crore was Rs 4,415 crore, TDS from those earning between Rs 10 lakh and Rs 20 lakh was Rs 5,770 crore. The number of taxpayers earning between Rs 5 lakh and Rs 10 lakh has also doubled in the last two years.