Horizontal equity

Horizontal Equity – Horizontal equity is a foundational principle of taxation that holds that taxpayers in similar financial circumstances should be treated equally by the tax system. The core idea is that individuals with comparable incomes or similar ability to pay should be required to contribute the same amount of tax, ensuring fairness and consistency in taxation. This principle emphasizes equal treatment regardless of personal characteristics such as age, gender, occupation, or marital status. Horizontal equity is often contrasted with vertical equity, which deals with the taxation of individuals with differing abilities to pay, usually advocating higher taxes for those with greater income.

Example: Two salaried employees earning ₹10 lakh per year should pay the same amount of income tax under horizontal equity, even if one is single and the other is married.