A good tax system must have the following features –
Fairness: For any tax system to be fair, it must include 2 components which are – Horizontal equity and Vertical equity. Horizontal equity is ensured when individuals in identical or similar situations paying identical or similar taxes whereas Vertical equity is ensured when ‘better off’ pay more taxes.
Efficiency: Efficiency here means that a tax system must be able to raise more revenue with least cost on taxpayers.
Administrative Simplicity: A tax system must include simpler methods of computation, filing, collection etc. It ensures better compliance rate. In India, given the low financial ....
