Why Is Wealth Tax Abolished In India
The Wealth Tax was revised in the year 1993.It is done by the recommendations of Chelliah Committee. The Chelliah Committee has also recommended first to abolish wealth tax other than unproductive forms of wealth.
Hi , Wealth Tax in India is introduced in the year 1957. Normally it is levied on Individual, HUFs and Companies, if the **Net Wealth** is more than 30 Lakhs on the **valuation date** i.e on the last date of the previous year. Arun Jaitley(Finance Minister) has announced in Budget 2015 that Wealth Tax is completely removed from the F.Y.2015-16 onwards.(Note that it is from the F.Y.2015-16 **onwarws**) Reasons: The Wealth Tax was revised in the year 1993.It is done by the recommendations of Chelliah Committee. The Chelliah Committee has also recommended first to abolish wealth tax other than unproductive forms of wealth. The actual income to the government from the wealth tax during F.Y 2011-12 was 788.67 Crores & for F.Y. 2012-13 was 844.12 Crores and the wealth tax assesses are just more than 1 Lakh out of 100 crores. This levy creates compliance burden on the tax payers and also administrative burden on the government for a nominal amount of revenue. Also according to wealth tax rules the value of wealth shall be determined by only Registered Valuer which is burden to the tax payer. So, the government decides to remove Wealth Tax, and, to compensate the loss of revenue they have introduced additional surcharge on high income assesses.
The collection from wealth tax was just 1008 crores in the year of 2013-14. Whereas, the cost of collection and the cost of compliance was more. The ratio did not seem to be favorable. Thus, with a view to tax super rich and not less affluent ones, the finance minister introduced an additional 2% surcharge. It is expected that this additional surcharge would generate a revenue of 9000 crores. Foregoing 1008 for earning 9000 sounded beneficial. Hence, wealth tax was abolished and a 2 fold benefit was achieved.