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The statement:
"2–3 crore people are paying for the entire country"
is emotionally powerful, but it is an oversimplification. India has roughly 140–150 crore people.
Only a small fraction:
Files income tax returns with meaningful tax liability.
Pays most personal income tax.
Owns businesses that pay corporate tax.
Participates heavily in the formal economy.
As a result:
A salaried employee earning ₹25 lakh may pay ₹5–7 lakh in tax.
A businessman in the formal sector may pay GST, corporate tax, TDS, property tax, stamp duty, etc.
Meanwhile, a farmer, informal worker, daily wage laborer, or unemployed person may pay little or no income tax.
Looking only at the tax side, it appears:
"A small group is carrying everyone else."
And statistically, there is some truth to that. The question is:
Why are the remaining 140 crore people not paying much income tax?
Usually because they don't earn enough. Person Annual Income
CEO ₹2 crore
Professional ₹25 lakh
Shopkeeper ₹6 lakh
Labourer ₹1.8 lakh If all four paid exactly the same tax amount, that would be unfair. The person earning ₹2 crore has a far greater capacity to contribute than someone earning ₹1.8 lakh.
So the tax burden naturally becomes concentrated. If:
Top 10% own 70–80% of financial assets
Top 1% own a huge share of listed equities
Top income earners capture a large portion of national income
then it is expected that they pay a large share of taxes. A simple example:
Suppose a village has 100 people.
10 people earn ₹90 lakh total.
90 people earn ₹10 lakh total.
If tax is 20%:
The top 10 pay ₹18 lakh.
The remaining 90 pay ₹2 lakh.
Now people may say:
"10 people are funding the village!"
But they are also earning most of the village income. Many people think:
"The other 140 crore people pay no tax."
That is not true.
They may pay little or no income tax, but they still pay:
GST on purchases
Fuel taxes
Mobile recharge taxes
Electricity duties
Stamp duties
Vehicle taxes
Toll charges
A vegetable vendor may not pay income tax, but every time he buys soap, clothes, a mobile phone, or a fan, he is paying indirect taxes.
In India, GST and other indirect taxes are paid by almost everyone. A country's tax system is not meant to make everyone pay the same amount.
Its purpose is to:
Fund public goods (roads, defense, courts, railways, etc.).
Maintain social stability.
Allow economic mobility.
Create an environment where businesses and individuals can grow.
The balance is delicate.
If taxes on high earners become excessive:
Investment falls.
Entrepreneurship declines.
Capital leaves.
If taxes are too low:
Government cannot provide infrastructure and services.
Most successful economies try to stay somewhere in the middle.
