Taxation is an important factor that you should consider in all your financial plans. Different countries have different taxation systems. India follows a progressive taxation system.

The term “progressive tax” refers to a system in which tax rates rise in tandem with one’s taxable income. It is often broken down into tax brackets that have progressively increasing rates as you go through the levels. One possible progression of a progressive tax rate is a range from 0% to 45%, the minimum, and maximum brackets, respectively, as the taxable amount rises. Marginal tax rates are often higher than average tax rates under progressive tax systems.

What is progressive taxation?

A progressive tax is one in which the rate paid by the person grows as their income rises. The proper reading is that a taxpayer’s tax burden rises as his income increases, both relative to the quantity of their income and the total amount of his income.

A progressive tax is one in which the percentage of taxable income subject to taxation rises as income levels increase. Here, the tax burden falls disproportionately on those with higher incomes. Instead, the tax rate drops with rising income under a regressive tax system.

The tax system in India

India follows a progressive tax system. The table below explains the tax brackets.

Income Tax Slab New Regime Income Tax Slab Rates FY 2021-22

(Applicable for All Individuals & HUF)

Rs 0.0 – Rs 2.5 lakh NIL
Rs 2.5 lakh – Rs 3.00 lakh 5% (tax rebate u/s 87a is available)
Rs 3.00 lakh – Rs 5.00 lakh
Rs 5.00 lakh- Rs 7.5 lakh 10%
Rs 7.5 lakh – Rs 10.00 lakh 15%
Rs 10.00 lakhs – Rs 12.50 lakh 20%
Rs 12.5 lakhs – Rs 15.00 lakh 25%
> Rs 15 lakh 30%

Individuals in India pay income tax based on a graduated scale. The term “slab system” refers to the imposition of multiple tax rates on varying income levels. This implies that if a person’s income rises, so does the rate at which they are taxed. With this method, countries may have tax systems that are both progressive and equitable. These tax brackets are subject to change with each annual budget. Slab rates vary according to the kind of taxpayer & importance of tax planning.

The tax system for senior citizens in India is different. Below is a table that explains the same.

Income Tax Slab Individuals Below The Age Of 60 Years – Income Tax Slabs
Up to Rs 2.5 lakh NIL
Rs. 2.5 lakh -Rs. 5 lakh 5%
Rs 5.00 lakh – Rs 10 lakh 20%
> Rs 10.00 lakh 30%

Pros of a Progressive Tax Structure

  • The tax planning burden is fairly distributed. The majority of the financial burden falls on the wealthiest individuals.
  • Those with fewer financial resources in society get tax breaks to prevent them from being unduly burdened by their monetary obligations to the government.
  • More money is brought into the government coffers than under a proportionate tax system.


One definition of a progressive tax system is one in which the rate of taxation rises in tandem with rising levels of taxable income. Individuals whose income is less than the threshold set by the relevant taxing authorities are generally exempt from paying any taxes.

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