What is a regressive tax?

Applying uniform tax on a large percentage of low income earners than on high income earners is known as regressive tax. Regressive tax imposes more burden on the poor than on the rich. The tax burden on people having more ability to pay gets reduced. You can read about the Taxation System in India – Types, GST, VAT, Objectives, Limitation, Laffer Curve in the given link.

In regressive taxation, as the amount subject to taxation increases, the tax rate reduces.

Further readings:

  1. CBDT – Central Board of Direct Taxes: Functions and Structure
  2. Double Taxation Avoidance Agreement (DTAA) – Countries Involved, Income Tax Provisions

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