Wealth tax liability

Why is wealth tax payable only on six types of assets and not on others?

Jayanto Chatterjee, Kolkata

This was not so till 1992 when the Direct Taxes Reforms committee headed by Dr Raja Chelliah recommended that wealth tax better be abolished in view of its woefully low contribution to the exchequer; but if it is sought to be persisted with, it should be only unproductive assets. Its choice of unproductive assets has been controversial. Motor cars irrespective of their size are included and so are houses irrespective of their size. Paintings and race horses, often the symbols of the rich, are conspicuous by their absence. The draft Direct Taxes Code did the right thing by seeking to revert to the old law of taxing all assets, but the final version before Parliament has plumped for the status quo even though it has enlarged the list with some inconsequential items such as imported watches! Shares are another conspicuous omission.

Inheritance tax

Why India does not have inheritance tax ?

Jayanto Chatterjee, Kolkata

Estate Duty Act has been in a suspended animation for more than three decades now. Almost all the States in the US have some sort of inheritance tax with the maximum marginal rate in a few States creeping up to a frightening 55 per cent, goading industrialists and tycoons to morph into philanthropists! In India, in the absence of estate duty or its variant inheritance tax, a Will becomes the central plank of estate planning, especially when its author has considerable self-acquired properties to bequeath. There is, indeed, a case for reviving estate duty law sans its complications. There is nothing wrong in the government mobilising funds from the estates of the super rich though it should not yield to the temptation of making the sad event a happy occasion for confiscation which a 55-per-cent tax certainly would be.

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