Question

Vikram earns ₹1,00,000 and Kumar earns ₹5,00,000. But both are expected to pay 20% of their income as tax. Identify the type of taxation system.

• A. Proportional taxation system
• B. Progressive taxation system
• C. Regressive taxation system
• D. Rational taxation system

Answer 1

The correct option is A Proportional taxation system

When people earn an income, they pay the income tax. A taxation system in which everyone has to pay an equal proportion of their income, irrespective of the amount, is called the proportional taxation system. The burden of the tax is more on the low-income earner than the high-income earner.