Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: empanelment :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: articles on VAT and GST in India :: VAT RATES :: Central Excise rule to resale the machines to a new company :: due date for vat payment :: ACCOUNTING STANDARD :: TDS :: form 3cd :: ACCOUNTING STANDARDS :: ARTICLES ON INPUT TAX CREDIT IN VAT :: VAT Audit :: TAX RATES - GOODS TAXABLE @ 4% :: list of goods taxed at 4% :: cpt
 
 
« General »
 Tax Department To Launch 2nd Phase Of Bank Accounts' Scrutiny Next Month
 How to claim tax benefit on tuition fees under Section 80C
 Online Income Tax grievance redressal facility launched at 60 offices
 Demonetisation impact on government tax revenue marginal; direct tax personal income grew at above budget estimates
 ICAI seeks more accountability, transparency in defence sector
 Will Budget help double farmers’ income?
 Verify online deposits made post demonetisation, income tax department asks taxpayers
 Union Budget 2017: Best budget is do not change anything, do no harm, implement well
 Why salaried class deserves standard deduction
 3 new taxes that Modi government could introduce, but won't
 Tax gains may showcase demonetisation windfall

The gains of scrapping wealth tax
March, 21st 2015

“Curtains on wealth tax”, screamed the headlines after the much-awaited “big bang” Budget was presented. Before that the question on everyone’s mind was, should a tax which leads to high cost of collection and low yield be continued or should it be replaced with a low-cost and higher-yielding tax?

The finance minister answered this question by proposing to scrap wealth tax and increase the surcharge by 2% on the so-called “super-rich” taxpayers. Increasing the surcharge will contribute an additional R8,000 crore to the government’s tax revenues compared to R1,008 crore realised by the government from wealth tax in FY14.

Wealth tax, which was introduced with the objective of reducing inequalities and helping enforcement of income tax through cross-checks, is one of the most overlooked statutes by taxpayers in India, and a large portion of the burgeoning Indian middle-class could well be under this net with the Indian mindset to invest in multiple properties (one of the most common wealth tax assets being properties and land) and to buy and inherit jewellery.

After several years of representation by various stakeholders, wealth tax will finally see the sun go down effective April 1, 2015. Interestingly, the wealth tax form was refurnished and changed only last year which lead to the thought that this tax was originally here to stay.

The proposal to do away with wealth tax has been met with relief as it meant doing away with the need for taxpayers to collate information on different assets (including non-productive assets, which sometimes became cumbersome to track) and the value of assets (including obtaining a valuation report and filing a separate return). However, while this is one tax less, the rigours around reporting may continue as the finance minister proposes to modify the personal income tax returns, to enable taxpayers to provide details of assets owned in India. This move is to allow the revenue authorities to track the wealth held by individuals and other taxpayers. The new, proposed reporting requirements aim to ensure that the abolition of wealth tax does not lead to escaping of any income from the tax net. Resident taxpayers are already required to report assets owned by them in countries outside India for the last few years and this addition to the forms will mean they need to give details of assets in India as well.

One, however, has to wait and watch as the new forms unfold—the form, the extent of data required to be reported, whether the requirements will be a replica of the wealth tax return form are the questions for which answers are awaited. If appropriate guidelines with respect to disclosures are not prescribed, it is feared that one of the objectives of scrapping wealth tax may get defeated—reducing taxpayers’ burden and simplifying tax procedures.

The finance minister, in a post-Budget event, acknowledged that this is a “cleaner” and “neater” way of tax administration without any harassment to the taxpayers.
With the government’s strong focus on curbing black money, the asset (Indian and foreign) reporting requirement will assist the revenue authorities to track the assets and also match them with the income of taxpayers. Another aspect which needs to be considered by the taxpayers is the penal consequences of non-reporting or inaccurate reporting of assets in the income-tax return. The government proposes to introduce a new legislation to curb domestic black money and only time will tell whether it will have any penal consequences.

The finance minister has aimed to address multiple issues with one stroke—increase tax revenues, reduce administrative burden of revenue authorities and curb the menace of black money. Whether this is the perfect move towards “minimum government, maximum governance” and a simplification of tax procedures, is a question which will get answered once the new tax returns are notified. Another question is: Will the personal tax return form be modified for the “super-rich” or will it be applicable to all taxpayers?

All great changes are preceded and, sometimes succeeded, by chaos. Let’s wait and watch what this change leads to for the taxpayers, apart from an immediate increase in the rate of surcharge to 12%.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Company Overview

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions