Question

Explain the term progressive tax.

Answer 1

Progressive Tax refers to a kind of tax system in which the rate of tax increases with the rise in the taxpayer's income. The term "Progressive" indicates the way the tax rate progresses from low to high with the result that a person with low income pays less tax while a person with higher income pays higher tax.

Income	Tax Rate
50,000	15%
1,00,000	20%
3,00,000	30%

This table indicates when the income is ₹ 50,000, the tax rate is 15%, but when income increases to 3,00,000, the tax rate increases to 30%.