Effective tax rate

Tax Glossary Definition

Effective tax rate

The effective tax rate represents the average proportion of income paid as taxes by an individual or entity after accounting for deductions, exemptions, and tax credits. Unlike the statutory tax rate, which reflects the legally prescribed percentage, the effective rate provides a realistic measure of the taxpayer’s actual tax burden and overall compliance cost. It serves as a key indicator for comparing tax efficiency across taxpayers or jurisdictions.

Example: If a company earns ₹10 crore in profit and pays ₹2.5 crore in taxes after applying all deductions and credits, its effective tax rate is 25%.

India's Most Trusted
Pro Tax Filer

Discover why we're one of India's most trusted Pro Tax Filers, built on a foundation of accuracy and reliability.

  • We ensure maximum tax benefits.

  • Taxes? Handled by our CAs and experts.

  • Reliable, year-round tax support at no cost.

  • Satisfaction or your money back came twice.

Start Filing

Scan the QR code to Download the app

Mobile App Available on:

DOWNLOAD For IPHONE

TaxFilr App

DOWNLOAD For Android

TaxFilr App

Have Questions? Let’s Talk!

Chat With Us

Scan to chat

Scan QR Code

OR
Start Chat
Mobile Apps Available On
This feature is available on our mobile app. Get the app now to access this feature!

DOWNLOAD For IPHONE

TaxFilr App

DOWNLOAD For Android

TaxFilr App