Wealth Tax was a form of direct tax in India that was levied on the net wealth of individuals, Hindu Undivided Families (HUFs), and companies. It applied to the market value of certain specified assets such as real estate (excluding one house), jewellery, cars, and other luxury items, after deducting liabilities owed on them. The purpose of Wealth Tax was to ensure a more equitable distribution of wealth by taxing high-net-worth individuals who owned non-productive assets.
However, Wealth Tax was abolished in India starting from the financial year 2015–16 (Assessment Year 2016–17) due to high administration costs and low revenue collection. In place of this tax, the government introduced a surcharge of 2% on individuals earning more than ₹1 crore annually, thereby simplifying compliance while still targeting the wealthy segment.
Though no longer in force, the term Wealth Tax is still relevant when discussing historical taxation, legacy disputes, or financial audits involving past fiscal years. Businesses and professionals should be aware of such historical tax structures as they may surface in tax assessments or legal clarifications.
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