1078 (Income Tax) What is the Difference between Progressive and Flat based taxation system? Case Methodology - Harvard Case Model Video Link - https://youtube/watch?v=a2hx0Wl7Cgg Narration - By Amlan Dutta Before we begin let us first understand why the progressive based taxation was bought .It was bought by the government so that the rich pay more taxes and the poor pay less taxes so that the gap between the rich and the poor narrows down and the taxes collected can be used for the welfare of the society . Much in contrast a Flat based taxation would mean same financial burden to the poor class as also the rich class Lets take a example - Say the previous year is 2013 14 .The data operator working in my office at 15000 per month would earn 180000 annually and me earning around a lakh per month would have a annual package of 12 lakhs We have the slab based taxation system which implies nil tax for 0 -2 lakhs , 10 % for 2-5 lakhs , 20 % for 5- 10 lakhs and 30 % for 10 lakhs and above ( for assessment year 2014 15 ) Complying to this his tax liability is therefore nil and my tax liability is 130000 Rs plus education cess i.e total tax at 133900 Rs If we both had a flat tax at 20 % , even he would pay tax of 18000 Rs and i would pay tax of 180000 Rs ... However by bringing in progressive slab based taxation , the poor class is removed from the burden of taxation and the medium working class is also benefitted of the slabs which given them comfort of the progressive slabs which is far beneficial of a flat slab ( because the average tax works out to be far lesser ..) Most countries have progressive based taxation ....however the only loophole here is that the rich know how to take advantages of the weakness in the act and show expenses and reduce their income and so the entire motto is defeated ! Anyways thats all ...hope you enjoyed the concept and also the tutorial as much as i enjoyed making it , Cheers , Amlan Dutta
Posted on: Sun, 14 Dec 2014 04:08:41 +0000
Trending Topics
Recently Viewed Topics
© 2015