Flat Tax

The flat tax meaning is often confused with direct tax, but the two concepts are not the same. Flat tax refers to the tax system where all taxpayers, regardless of their income, are subject to a uniform tax rate. The flat tax system typically does not offer any exemptions or deductions. 

To understand this better, here is a flat tax example: A household with an annual income of ₹15,00,000 and another household with an annual income of ₹4,00,000 pay the same tax rate of 20%. This is called a flat tax rate of 20%.