Understanding Income Tax and Benefits in India Compared to Nordic Countries

Income tax in India presents unique challenges, and Vineeth K has sufficient experience dodging potholes and managing substantial tax contributions. Recently, this tech entrepreneur took to social media to pose a pressing question many Indian taxpayers have: Why does a 35% income tax in India feel less valuable than similar rates in Nordic countries?

This inquiry has rekindled discussions about what Indian taxpayers receive in exchange for their contributions, a conversation filled with frustration, comparisons with Europe’s welfare systems, and the substantial challenges faced by India.

The Contrast in Tax Systems

Vineeth K, the Founder of Dealsdhamaka and PointPerksPicks, expressed his concerns in a post on X (previously Twitter), outlining the advantages that taxpayers in Nordic nations enjoy in contrast to the Indian experience.

Tax Benefits in Nordic Countries

• 30-40% income tax rates
• Free education
• Free healthcare
• Exceptional work hours
• High-quality infrastructure and roads
• Job security in case of unemployment

In his post, he noted, “I pay 35% in India. Roads with potholes, Corrupted Netas, High taxes on health insurance, No security if the job is lost.” His statement encapsulated the frustration felt by many.

The Viral Reaction

His post quickly garnered attention, attracting thousands of reactions. While some users resonated with his frustrations, others approached the discussion with more nuance.

One user shared insights, stating, “I keep hearing Nordic countries as examples for being best systems. But the major factors for them are: Highly export-oriented economies providing massive budget surpluses, income tax rates of 50% for the highest earners, and a low population. With the increasing immigration of low-income populations, the sustainability of this model remains uncertain. Therefore, solutions to our issues must be discovered within our unique context.”

Broader Tax Base in Nordic Countries

Vineeth replied, acknowledging the validity of the user’s points, while emphasizing that in Nordic countries, nearly everyone contributes to taxation. “The direct tax burden does not fall on just 3-4% of the population; it reflects a broader tax base,” he pointed out.

First-Hand Experiences

Another user shared, “I have briefly worked in Nordic countries. Their job security is commendable. Even when laid off, one receives 1.5 years of full salary, alongside free education and healthcare.”

Yet, not everyone feels hopeful about the possibility of resembling the Nordic system. A respondent remarked, “We have far too many mouths to feed… we will never reach the standards of Nordic countries. It is what it is.”