INTERVIEW QUESTIONS TAX WEALTH TAX DETAILS

Question: Why has Wealth Tax been abolished?

Answer: Some of the main objectives cited by experts behind the move include the following:-

Focus on more governance and less government: Finance minister, during his budget speech, cited the lack of ease of doing business as one of the reasons for abolishing the wealth tax. Also, by abolishing wealth tax, government has reduced the scope of some taxpayers taking undue advantage of the loopholes in the wealth tax act.
Simplification of tax procedures: According to experts, Indian tax laws are, by and large, very complex and therefore, prone to litigations. Government wants to simplify procedures for easier tracking and enhance transparency.
Incurs high collection costs but provides low yield: In a country with increasing number of billionaires, government collected a meagre Rs. 1008 crore as wealth tax last fiscal, exposing how the cost of collecting the tax is much higher compared to the low yield. Also, wealth tax does not form a major chunk of collection of direct taxes in India (Rs.788.67 crore and Rs.844.12 crore were collected as wealth tax in 2011-12 and 2012-13 respectively).
Increase the revenue collection: By abolishing the wealth tax and replacing it with additional surcharge, government can collect up to Rs. 9000 crore in a fiscal year, opined the finance minister in his budget speech.
Additional administrative burden: Taxpayers had to value their assets as per the Wealth Tax Rules to compute their net wealth. For certain assets such as jewellery, taxpayers had to obtain a valuation report from a registered valuer.
Tax compliance and widening the tax base: Government wants to bring more persons under its tax net given that individuals who file income tax returns outnumber those who file wealth tax returns.
Additional reporting: Taxpayers will have to do some additional reporting of information in their income tax returns in terms of listing out their assets and liabilities.
No leakage: Details about assets submitted by the taxpayer in the income tax returns will help officials correlate declared wealth with the declared income. Tax officers can, therefore, ensure that there is no tax ‘leakage’. Earlier, unproductive assets such as jewelry which cannot be readily tracked would allow assessees to skip making such disclosures in their wealth returns.
Low Awareness: According to rough estimates, many assessees in the country are only dimly aware of the existence of the wealth tax. Consequently, more often than not, assessees are served with notices for failing to pay wealth tax. In 2011-12, the number of wealth tax assessees in India stood at 1.15 lakhs.

Some of the main objectives cited by experts behind the move include the following:-

Focus on more governance and less government: Finance minister, during his budget speech, cited the lack of ease of doing business as one of the reasons for abolishing the wealth tax. Also, by abolishing wealth tax, government has reduced the scope of some taxpayers taking undue advantage of the loopholes in the wealth tax act.
Simplification of tax procedures: According to experts, Indian tax laws are, by and large, very complex and therefore, prone to litigations. Government wants to simplify procedures for easier tracking and enhance transparency.
Incurs high collection costs but provides low yield: In a country with increasing number of billionaires, government collected a meagre Rs. 1008 crore as wealth tax last fiscal, exposing how the cost of collecting the tax is much higher compared to the low yield. Also, wealth tax does not form a major chunk of collection of direct taxes in India (Rs.788.67 crore and Rs.844.12 crore were collected as wealth tax in 2011-12 and 2012-13 respectively).
Increase the revenue collection: By abolishing the wealth tax and replacing it with additional surcharge, government can collect up to Rs. 9000 crore in a fiscal year, opined the finance minister in his budget speech.
Additional administrative burden: Taxpayers had to value their assets as per the Wealth Tax Rules to compute their net wealth. For certain assets such as jewellery, taxpayers had to obtain a valuation report from a registered valuer.
Tax compliance and widening the tax base: Government wants to bring more persons under its tax net given that individuals who file income tax returns outnumber those who file wealth tax returns.
Additional reporting: Taxpayers will have to do some additional reporting of information in their income tax returns in terms of listing out their assets and liabilities.
No leakage: Details about assets submitted by the taxpayer in the income tax returns will help officials correlate declared wealth with the declared income. Tax officers can, therefore, ensure that there is no tax ‘leakage’. Earlier, unproductive assets such as jewelry which cannot be readily tracked would allow assessees to skip making such disclosures in their wealth returns.
Low Awareness: According to rough estimates, many assessees in the country are only dimly aware of the existence of the wealth tax. Consequently, more often than not, assessees are served with notices for failing to pay wealth tax. In 2011-12, the number of wealth tax assessees in India stood at 1.15 lakhs. Source: CoolInterview.com

If you have the better answer, then send it to us. We will display your answer after the approval.

Rules to Post Answers in CoolInterview.com:-

• There should not be any Spelling Mistakes.
• There should not be any Gramatical Errors.
• Answers must not contain any bad words.
• Answers should not be the repeat of same answer, already approved.
• Answer should be complete in itself.

Name :*
Email Id :*
Answer :*
Verification Code	Not readable? Load New Code
Enter the above shown code: *
	Inform me about updated answers to this question