Wealth Tax

Understanding Wealth Tax in India

The central government imposes a wealth tax on the people and individuals of India. There are some states that also impose the wealth tax. The rate of this tax is fixed, and they are charged on the value of the individual's assets. These assets include land, cars, and buildings.

A wealth tax in India is a type of tax charged on the assets of individuals with a certain threshold. The sole purpose of the wealth tax is to reduce the inequalities in terms of wealth. This tax was abolished in the 2015 budget.

Provisions of Wealth Tax in India

The basic provisions of the wealth tax are as follows:

The wealth tax is imposed only on the following persons:

• An individual
• A Hindu Undivided Family (HUF)
• A company

The wealth tax is not imposed on the partnership firms. The assets of the partnership firm are charged to tax.

Why was the Wealth Tax in India abolished?

Here are the main reasons why the wealth tax has been abolished:

1. Simplifying Tax: The Indian Government has decided to abolish the wealth tax because it was fairly complex. They aimed to simplify, streamline, and make the existing tax regulations transparent.
2. Enhance the collection of revenue: As the surcharge has now replaced the wealth tax, the revenue earned by the government has increased more than before.
3. Lack of Awareness: There are very few people who have the knowledge about the wealth tax. Because of this, there are so many people who do not pay the wealth tax.
4. Burden and Complexity of Administration: To find the net wealth of the taxpayers, they had to value all of their assets as per the rules that are applied to the wealth tax. For the assets like valuable jewellery, the taxpayers have to contact the registered valuer to get the valuation report of the jewelry.