Property tax vs wealth tax are two of the many taxes in India that often leave people perplexed. Immovable & movable assets are subject to taxes, which aid in the government’s revenue collection. The property tax and wealth tax are discussed in this article, along with their significance in the Indian tax system.
Are you searching flats for rent in Belapur?
Although the words “wealth tax” and “property tax” may sound similar, they have different purposes in a financial portfolio. Wealth tax applies to wealthy people’s mobile assets, whereas property tax is paid against immovable property. Both taxes significantly increase government revenue, which is essential for a country’s growth and development. This article compares and contrasts the property tax and wealth tax, as well as the reasons for the government’s decision to remove wealth tax from the tax code.
What is Property tax?
Local governments impose property taxes on owners of real estate, which includes buildings and land. Usually, the tax amount is determined by the property’s assessed value. Property taxes are used by local municipal governments to pay for public services including sanitization, schools, and roads.
What is Wealth tax?
Conversely, wealth tax was a charge on an individual’s net worth, which included things like cash, jewels, vehicles, real estate, and more. After deducting obligations, it was computed on the total value of all taxable assets. The goal of the wealth tax was to reduce economic inequality by taxing people’s acquired wealth.
Why was India’s wealth tax abolished?
India did away with wealth tax in the Union Budget for 2015–16. This choice was made for a number of reasons:
Administrative challenges: The Wealth Tax required a lot of resources and complicated administration. It necessitated precise asset appraisal, which created administrative difficulties and conflicts.
Low revenue yield: In comparison to the administrative work required, the wealth tax produced comparatively little in revenue. The tax was more expensive to administer and enforce than it was advantageous.
Investment encouragement: The goal of eliminating the wealth tax was to lessen the financial burden on taxpayers and promote investment. It was thought that getting rid of this tax would encourage wealth development and economic expansion.
Property tax & wealth tax: important differences
The following straightforward table lists the main differences between wealth tax and property tax in the Indian context:
Criteria
Property tax
Wealth tax
Abolition
Still in existence
Abolished in India from the financial year 2015-16
Nature of tax
Tax on the ownership of real estate (land, buildings)
Tax on an individual’s total net wealth (assets – liabilities)
Revenue focus
Local government revenue for public services
Central government revenue for reducing economic inequality
Calculation basis
Assessed value of the property
Net value of all taxable assets
Assets taxed
Real estate assets
All taxable assets, including real estate, jewelry, and cars, among others.
To sum up, taxes on wealth and property both played a significant part in raising government revenue and funding. Local taxes on real estate ownership still exist in the form of property taxes, but wealth taxes were eliminated because of their complexity. The government imposes these taxes in order to raise money for efficient government operations and to upgrade public infrastructure for the benefit of its citizens.
You’re looking for Projects in Dombivali have the Best Properties In Thane Like Ready to Move:https://navimumbaihouses.com/properties/search/dombivali/
If you want daily property update details please follow us on Facebook Page / YouTube Channel / Twitter
The post Wealth Tax vs Property Tax: Definition & Key Differences appeared first on .