I have read here on numerous occasions that Tan got his fingers burnt the last time we were in the Premier League and it is given as a reason, which could be right, as to why he is holding back from spending freely this time around. How much of a financial hit did he take though?

Certain sources have our spending at the mid £30 million for transfers in that season. Wiki has it at £36 million plus which is a bit of guess work in parts but something to start with.
A lot of them signings were decent value in Premier League terms with Cornelius being the big exception but one that we made some money back on his return to Copenhagen (although City inevitably made a big loss on the fee paid).

http://www.sportingintelligence.com/2014/05/14/where-the-money-went-liverpool-top-premier-league-prize-cash-in-2013-14-140501/

This link shows that City made just over £63 million in the same season. It is backed up by many other sources.

I can't be the one that feels we got some decent value with our signings.
I rated Medel. Theophile-Catherine did a job.
Some of the Norwegians gave the impression of 'jobs for the boys' under Ole but none were big money in Premier League terms.

How true is it that we got burnt last time round and, if so, to what degree? Was it as bad as it is made out to be in some quarters. Personally I feel that it is being used as an excuse by many for Tan being thrifty this time around when the numbers show something very different and we did not do that bad at all financially given the prize money was up over £20 million on the previous season.

As mentioned previously as well, most of those signings saw some money coming back in after relegation. Medel is about the best example of that.