An Analysis of Trends and Patterns of Income Tax in India

Abstract

Taxes always occupy an important and strategic place in the development of an economy specially the developing or emerging economies. The present paper analyses patterns and trends in income tax of India. The data shows that the overall tax burden in the financial year 2004-05 was 28.67% which means that only 71.33% was available to people for consumption. However, the total tax burden in the financial year 2015-16 dropped to 18.67% and the income available for consumption was 81.33%. The trend analysis of growth rate in the first slab shows increasing trend from financial year 2004-05 to financial year 2010-11 i.e., to the level of 3300%. Thereafter, it went on decreasing from 3300% to 3100% to the lower level of 2900% in the financial year 2015-16. The second tax slab for 20% is showing an upward trend. The third tax slab for 30% has seen a declining growth rate from the level of 7.4% to 62.96%. Therefore we can interpret that the government intends to reduce the tax liability of tax payer and thus improve the standard of living of tax payers by allowing them more disposable income.