Wealth tax

Recently I came through this topic wealth tax, I remember, some times back in our college we had a debate on the topic "whether wealth tax is a necessary one or not" after that I came across this topic now only. First we will see what is wealth tax , the govt of India introduced this tax in the year 1957, it is one type of direct tax and is collected every year like income tax. Wealth tax is charged on individuals, HUF and companies who has net wealth exceeds Rs. 15 lakhs at the rate of 1%. This tax takes in to account of all types of assets except property held under trust, legal obligations for charitable or religious purposes.

This tax primary intention is to reduce accumulation of assets with only few people, and to avoid accumulation of money in hands of wealthy people. But people started cheating govt in many ways like setting up trusts and handling all the assets through the trust, operating all the assets in the name of other persons who are close to them in other countries. I think instead of collecting this wealth tax govt can increase the tax charged on peoples income who are earning more. In 2007 the no of wealth tax payers in India is only 13 million people but its going to increase to 42 million by 2012 a report said. In India people has invest able wealth of 250 billion $ in the year 2007 but its going to reach 1 trillion $ by 2012 while India's total GDP in 2010 is only 1.25 trillion $. Thus people in India have enormous wealth with them which can be invested in India if govt reduces or abolishes wealth tax and encourage all people to invest their money in India.