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Stream/Area:
-
Subject:
-
Paper ID:
IJSREM68228
Volume:
10 |
10 |
Oct 2026
Pages:
1-4
Publication Frequency:
Monthly (12 issues per year)
License:International Journal of Scientific Research in Engineering and Management follows the Creative Commons Attribution 4.0 (CC BY 4.0) License, allowing free use and distribution with proper attribution.
Department of Law
SRM Institute of Science and Technology
India levied an annual tax on net wealth from 1957 until it was abolished by the Finance Act, 2015. The reason given was simple: the tax cost too much to administer and brought in too little. A decade later the question has returned. Studies showing a sharp concentration of wealth at the top, together with international discussion of minimum taxes on billionaires, have revived calls for a wealth tax in India. This paper examines whether such a tax can be reintroduced and, more importantly, whether it can be made to work. It first traces the history of the Wealth Tax Act, 1957 and the reasons for its failure. It then examines the constitutional basis of a wealth tax, including the division of legislative power and the relevant decisions of the Supreme Court. The core of the paper deals with the practical problems of valuation, the definition of the tax base, liquidity, capital flight, compliance and the effect on fiscal federalism. A short comparison is drawn with Spain, which kept its wealth tax when most of Europe abandoned the idea and added a solidarity tax on large fortunes in 2022. The paper concludes that the legal obstacles are manageable, but the administrative ones are serious, and that any new tax must be designed very differently from the old one.
KEYWORDS
The abolition of wealth tax in 2015 was a judgment on a badly designed tax, not on the idea of taxing wealth as such. The constitutional position, settled by Sudhir Chandra Nawn and Harbhajan Singh Dhillon, poses no real obstacle to a new tax. The serious difficulties are practical ones: valuation, a leaky base, illiquid assets, mobility of the very rich and the division of revenue between the Union and the States. Better data and international cooperation have made some of these easier than before, but they have not disappeared. Spain shows that a wealth tax can survive in a modern economy, yet also that it needs careful design and political will. Whether India takes that step is for the legislature to decide. What this study suggests is that, if it does, it must learn from the failure of the 1957 Act rather than simply revive it.
[1] The Wealth Tax Act, 1957 (Act No. 27 of 1957), India. [2] The Finance Act, 2015 (Act No. 20 of 2015), India. [3] N. Kaldor, Indian Tax Reform: Report of a Survey. New Delhi: Ministry of Finance, Government of India, 1956. [4] A. Jaitley, "Budget 2015-2016: Speech of the Minister of Finance," Ministry of Finance, Government of India, Feb. 28, 2015. [5] The Constitution of India, Arts. 14, 265, 270; Seventh Schedule, List I, Entries 86, 97; List II, Entry 49. [6] Sudhir Chandra Nawn v. Wealth-tax Officer, AIR 1969 SC 59. [7] Union of India v. Harbhajan Singh Dhillon, (1971) 2 SCC 779. [8] Ley 19/1991, de 6 de junio, del Impuesto sobre el Patrimonio, Spain. [9] Ley 38/2022, de 27 de diciembre, Spain (Impuesto Temporal de Solidaridad de las Grandes Fortunas). [10] N. K. Bharti, L. Chancel, T. Piketty and A. Somanchi, "Proposals for a wealth tax package to tackle extreme inequalities in India," World Inequality Lab, May 2024.
Publication Date
10/22/2026
Peer Review Type
Double-Blind Peer Review
Review Rounds: 2
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