Wealth tax, gift tax and estate duty have been referred to as ‘paper taxes’ because they:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → have never brought in large amounts of revenue
Wealth tax, gift tax and estate duty are direct taxes. They were called ‘paper taxes’ because they never brought in much revenue: they existed more on paper than in the treasury.
NCERT (2026-27): “5.1.2 Classification of Receipts … Tax revenues, an important component of revenue receipts, have for long been divided into direct taxes (personal income tax) and firms (corporation tax), and indirect taxes like excise taxes (duties levied on goods produced within the country), customs duties (taxes imposed on goods imported into and exported out of India) … Other direct taxes like wealth tax, gift tax and estate duty (now abolished) have never brought in large amount of revenue and thus have been referred to as ‘paper taxes’. The redistribution objective is sought to be achieved through progressive income taxation, in which higher the income, higher is the tax rate. Firms are taxed on a proportional basis, where the tax rate is a particular proportion of profits. …” |