India’s income tax landscape has changed and it’s a pity that barely anyone has been talking about it. Over the last few years, the small individual income taxpayer has been paying more income tax on the whole than the corporations. And the difference has been increasing every year.

In 2024-25, the union government collected Rs 12.57 lakh crore through taxes on income, a tax primarily on the income of individuals. This was 28 percent more than the Rs 9.8 lakh crore of corporation tax or income tax on the profit made by corporates. In 2025-26, the current financial year, this difference is expected to increase to 33 percent.

Take a look at the following graph which plots the ratio of taxes on income to corporation tax. 

As can be seen in the chart, in 2016-17, the ratio was 72 percent. In 2024-25, this had increased to 128 percent, implying that the small individual taxpayer is paying more tax than the corporations.

Now, take a look at the following chart. This essentially plots the taxes on income and corporation tax as a percentage of India’s gross domestic product, or GDP. GDP is a measure of the size of an economy. This metric takes the increasing size of the Indian economy into account.

This chart makes for interesting reading and shows how things have changed. In 2016-17, taxes on income amounted to 2.3 percent of the GDP. By 2024-25 they had jumped to 3.8 percent of the GDP. Meanwhile, the corporation tax – which was at 3.2 percent of the GDP in 2016-17 and 3.5 percent in 2018-19 – has largely remained flat at around three percent over the last few years. 

So, what explains this shift? Why are individuals paying more income tax than corporations?