“Do you know what income tax rates were in those days?,” asks the old-timer. “No,” you say somewhat skeptically. “90% my young friend, the Government of India took away everything. What do you think started the chain of black (unaccounted) money and corruption? It was crippling tax rates.”
Many of us have heard that but have dismissed the statement because it didn’t add up or boggled the imagination. A recent Government document refreshes our economic history somewhat. Inasmuch as it highlights how between 1970 to 1974, any Indian resident earning more than Rs 200,000 per annum paid an income tax of 93.5%.
It didn’t get much better immediately after. As the table shows, it stayed above 50% right until 1995 after which tax rates came down to 40%. Needless to add, that was when economic liberalisation took hold in India and the lowering of income tax rates was accompanied by an overall lowering of tariffs and de-licensing. Moral of the story: You are living in good times.