ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Definition: Progressive tax is the taxing mechanism in which the taxing authority charges more taxes as the income of the taxpayer increases. A higher tax is collected from the taxpayers who earn more and lower taxes from taxpayers earning less. The government uses a progressive tax mechanism.

Detailed explanation-2: -A progressive tax is a tax system that increases rates as the taxable income goes up. It is usually segmented into tax brackets that progress to successively higher rates. For example, a progressive tax rate may move from 0% to 45%, from the lowest and highest brackets, as the taxable amount increases.

Detailed explanation-3: -India follows a progressive tax system. Under a progressive system, high-income earners pay more than low-income earners. Under a regressive tax system, low-income earners pay a higher amount of taxes than high-income earners.

Detailed explanation-4: -No, income tax in India is progressive in nature because tax rate increases with increase in income. Q. Indirect taxes are regressive in nature. How can they be made progressive?

Detailed explanation-5: -A progressive tax is characterized by a more than proportional rise in the tax liability relative to the increase in income, and a regressive tax is characterized by a less than proportional rise in the relative burden.