Reason why Wealth Tax Act 1957 is abolished

Back Ground

Wealth Tax act is an act of Parliament of India which provides for levying of Wealth Tax on the individual, HUF, Company, is in possession of, on the Corresponding Valuation Date. It is applicable in all over the India including Jammu & Kashmir. It was last amended by financial Bill 2012.

Finance Minister Arun Jaitely Presented Union Budget 2015-16 for FY 16 in February 28 2015 in Lok Shaba.

The Finance Minister Believes that wealthier people should pay more. He decided to abolish wealth tax and replace it by 2% surcharge (means additional payment other than Tax). Wealth Tax used to be 1% on Net wealth exceeding 30 Lakh rupees and Non-resident Indians were exempted from the tax for several years.

   

Some of the Major drawbacks of Wealth Tax and reason behind abolishing are:-

·         Wealth should be valued by registered valuer which increase the cost and burden for assesse.

·         Assets like Jewelleries, unaccounted assets, car etc are not easily traced.

·         As we know that Wealth tax is not paid by all assesse. As per the report of 2011-12, near 1.15 lakhs people paid this tax.

·         This tax is not the main and significant tax with total collection of the Direct Tax .

So it takes hassles the filing of Wealth tax and simplifies the process of filing a return as you have to pay 12%  instead of 10% In the surcharge.

It will also lead to more people filing it as earlier a number of people  were not even paying Wealth Tax

Regards

Keshav Kumar KC

CA Final 

Thanks 

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