Indians are among the most highly taxed in the world. But believe us, things are not as bad as they were a few years ago. Then, the tax-free income limit was a mere Rs 40,000 and, in the highest tax slab, the taxman took away 40% of your income.
1995-96 | ||
Income tax | ||
| Annual Income | Amount | As % of Income |
| Rs 5 lakh | Rs 1.68 lakh | 33.6 |
| Rs 10 lakh | Rs 3.68 lakh | 36.8 |
2003-4 | ||
| Income tax | ||
| Annual Income | Amount | As % of Income |
| Rs 5 lakh | Rs 1.15 lakh | 23 |
| Rs 10 lakh | Rs 2.95 lakh | 29.5 |
2007-8 | ||
| Income tax | ||
| Annual Income | Amount | As % of Income |
| Rs 5 lakh | Rs 1.02 lakh | 20.4 |
| Rs 10 lakh | Rs 2.81 lakh | 28 |
Calculations are based on the taxable income after taking into account the exemptions and tax deductions available under various sections of the Income Tax Act.
Though the income tax burden has reduced across all income groups, low income earners have benefited the most. But the service tax and education cess neutralise much of the relief for all taxpayers.
