Revisiting The Ability-To-Pay Doctrine Through Horizontal Equity In Tax Law
- IJLLR Journal
- 5 days ago
- 1 min read
Meenu. M.B., Government Law College, Kozhikode
ABSTRACT
The principles of taxation form the backbone of a fair and efficient fiscal system, and among them, the Ability to Pay Principle and Horizontal Equity occupy a central role. This article examines these principles from theoretical, constitutional, judicial, and practical perspectives, emphasizing their relevance in the Indian tax system. The Ability to Pay Principle asserts that taxpayers should contribute to public revenue proportionate to their economic capacity, providing the foundation for progressive taxation and social justice. Horizontal equity complements this by ensuring that taxpayers with similar financial circumstances are treated equally, preventing arbitrary or discriminatory tax burdens. The article traces the constitutional basis, including Articles 14, 39(b), and 265, and highlights judicial recognition through landmark cases such as Kunnathat Thathunni Moopil Nair v. State of Kerala and R.K. Garg v. Union of India. It further explores the practical application of these principles in direct and indirect taxation, including income tax, GST, exemptions, deductions, and surcharges. The study underscores the inseparable relationship between the Ability to Pay Principle and horizontal equity, demonstrating that their combined application ensures fairness, equity, and legitimacy in the Indian taxation system. Challenges such as administrative constraints, evasion, and the informal economy are acknowledged, emphasizing the need for continual refinement of tax policy to uphold these principles.
Keywords: Ability to Pay Principle, Horizontal Equity, Progressive Taxation, Tax Fairness, Constitutional Principles, Article 14, Social Justice, Income Tax, GST, Judicial Recognition.
