In India, the poor and middle class bear a higher, disproportionate tax burden compared to the rich when considering total tax contribution, primarily through indirect taxes like GST. Reports indicate the bottom 50% of the population contributes roughly 64% of total GST, while the top 10% contributes only about 3-4%.
While middle-income earners are paying more in taxes, corporate profits and personal wealth of the rich continue to benefit from relatively light taxation through lower rates, exemptions and incentives. Over the last decade, India's tax regime has tilted in favour of corporates and indirect taxes.
Reliance Industries Limited (RIL) is a Fortune 500 company and India's largest private sector corporation. RIL paid the highest tax with a sum of Rs. 20,713 crore in taxes during the financial year 2022-23.
Maximum marginal rate is the highest rate of tax at any income level. This means for those with incomes between Rs 2 crore and Rs 5 crore, 39% will be the highest applicable tax rate, and for those with incomes above Rs 5 crore, it will be 42.74% — the highest tax rate since 1992.
According to government reports, while over 7 crore people file tax returns, only a fraction of them actually pay taxes because many fall below the taxable income threshold or use deductions to reduce liability.
As an Indian, you are subject to the same tax rules as other Canadian residents unless your income is eligible for the tax exemption under section 87 of the Indian Act.
In her 2025 Budget speech, Finance Minister Nirmala Sitharaman shared big news. Under the new regime, if you earn up to Rs 12 lakh, you will not have to pay any income tax. Salaried taxpayers get an extra benefit too. The standard deduction, which was Rs 50,000 before, has now gone up to Rs 75,000 for the new regime.
Income tax plays a vital role in funding public services, infrastructure, education, healthcare, defence, security, and various welfare services. Income tax in some countries is as high as 60%. To your surprise, India is not a country with the highest income tax.
“At a salary of one crore, the average tax rate is 29.26% in the New Regime, compared to 32% in the Old Regime. As the salary increases, the average tax rate in both regimes also increases, reaching 38.42% in the New Regime and 42.46% in the Old Regime for ₹10 crore income,” the CEO of Tax2win added.
In India, the tax system is designed not only to generate revenue but also to foster economic stability, promote equity, and drive national progress. In last 10-15 years, Indian taxation system has undergone tremendous reforms.
Nine U.S. states currently have no state income tax on earned income: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming, though some nuances exist, like Washington's new capital gains tax and New Hampshire's phase-out of its interest/dividend tax. These states often balance their budgets with higher sales, property, or excise taxes.
According to the latest data from the CBDT, Mumbai alone contributes to over 33% of India's total Income Tax collection! That is one-third of the entire country's contribution coming from just one city.
Super-wealthy Indians on the Forbes List pay tax amounting to a mere 5% of their capital income. The tax rules render the tax regime even more regressive with respect to wealth. "We show that at top wealth levels, the wealthier a taxpayer, the smaller the income tax paid relative to wealth.
The average federal tax burden is much lower for low-income households than for high-income households.
Tax Rates and Deductions Comparison
In 2025, India's tax slabs range from 0% on income up to ₹4 lakh to 30% above ₹15 lakh under the new regime. The US has progressive tax brackets starting at 10% going up to 37%.
There isn't one single "highest tax paying country" as it depends on what's measured (income, corporate, total tax revenue), but countries like Denmark, Finland, Japan, and Ivory Coast (Côte d'Ivoire) consistently rank highest for top personal income tax rates, often exceeding 50-60%, while nations like Belgium can have the highest overall tax burden on labor (tax wedge) for average earners, with high social security. Nordic countries and some European nations generally have high income taxes, funding extensive social services.
In India, the 30% income tax rate generally applies to individuals earning above ₹24 Lakhs (under the old regime/default for some) or ₹15 Lakhs (under the new optional regime for FY 2025-26) and to firms (as a flat rate), while certain income types like lottery winnings, online gaming, and virtual digital assets (like crypto) are taxed at a flat 30% for everyone, regardless of total income.
Examples of income that are not taxable in India include agricultural income, gifts and inheritances, interest on EPF and PPF, scholarships and awards, life insurance proceeds, leave encashment, gratuity, Long-Term Capital Gains (LTCG), and interest on tax-free bonds.
Summary of zero-income tax countries
Among the countries with the lowest tax rates in the world are Malta, Cyprus, Andorra, Montenegro and Singapore. Aside from zero income tax, in Antigua and Barbuda, individuals are also free from paying taxes on wealth, capital gains, and inheritance.
The countries like India whose population is much more along that the income gap between rich and poor is higher it is harder to abolish the taxes.
A salary of $70,000 per year means that you would be taking home about $53,712 per year after taxes, or $4,476 per month to pay for things like housing, transportation, groceries, and entertainment. The average household income in Calgary is $129,000.
Benefits for Indigenous peoples
The average salary in Toronto is $62,050, which is 14% higher than the Canadian average salary of $54,450. A person making $85,000 a year in Toronto makes 37% more than the average working person in Toronto and will take home about $63,539.