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Question : Which of the following is referred to as "paper taxes"?
I. Wealth tax
II. Gift tax

Option 1: Only II

Option 2: Only I

Option 3: Both I and II

Option 4: Neither I nor II


Team Careers360 7th Jan, 2024
Answer (1)
Team Careers360 20th Jan, 2024

Correct Answer: Both I and II


Solution : The correct option is Both I and II .

The term "paper taxes" refers to taxes that are levied but generate little to no actual revenue for the government. This is because they often apply to a narrow base of taxpayers or are easily avoided through loopholes.

A wealth tax was levied on the net wealth of individuals exceeding a certain threshold. It was abolished in India in 2015 due to its low revenue generation and complex administration.

A gift tax is levied on the value of gifts exceeding a certain limit. While it does generate some revenue, the amount is relatively small compared to other taxes. Additionally, there are ways to avoid the gift tax through legal loopholes.

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