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What is the average tax rate paid by the the taxpayer?

What is the average tax rate paid by the the taxpayer?

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Answer #1

Average tax rate paid by the taxpayer = Total tax paid (or) payable / Total taxable income * 100

The concept of average does araise in case of individuals, with different taxable slabs. In such cases, the overall rate applied for overall income will indicate the average tax rate applicable to that person.

Regressive system of taxation ; Average tax rate tends to increace will increase in the income of the person. As marginal tax is on increasing side for additional slabs, average tax paid by person is also increasing

Progressive system of taxation ; In this system, high tax rate is levied on lower income, and tax rates are decreased progresssively on marginal slabs. As a result, average tax rate decreases with increase in income.

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