Calculating Tax Ratio

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How much tax can you save? That depends on what your salary is and how smartly you manage it. These are the two elements which determine your tax outgo. So how do you know if you’re paying more taxes? It’s simple; just calculate your tax ratio.
Tax ratio = Tax paid / Gross salary
The catch here is that the Tax Ratio may sometimes differ for people in the same salary bracket.
According to a study conducted by TaxSpanner, the Tax Ratio of taxpayers with salary Rs. 7 lakh and 29 years of age ranges from 1% to 12%, thereby implying that some taxpayers in this group are paying just Rs. 7,000 (1%) as tax and some are paying Rs. 84,000 (12%) as tax. Ideally, if every individual is tax efficient in this group, then he/she should have tax ratio of 1% only!
So, while your tax ratio may be 10%, another person earning the same salary may have a tax ratio of 0%. Yes, you read it right: ZERO. To see where you stand against the best tax planners in your age and salary group, click here.