UPSC Prelims 2004·GS1·economy·public finance

Which of the following is a recommendation of the task force on direct taxes under the chairmanship of Dr Vijay L. Kelkar in the year 2002?

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  1. AAbolition of Wealth TaxCorrect
  2. BIncrease in the exemption limit of personal income to Rs 1.20 lakh for widows
  3. CElimination of standard deduction
  4. DExemption from tax on dividends and capital gains from the listed equity

Explanation

The Kelkar Task Force on Direct Taxes, 2002, recommended the total abolition of wealth tax because it was found to be an inefficient tax with high administrative costs and very low yield. The committee noted that the revenue collected from wealth tax was disproportionate to the effort required to enforce it.

While the committee did recommend increasing the general income tax exemption limit and removing certain deductions to simplify the tax structure, the specific values in option B were not its primary recommendation. Furthermore, it recommended the removal of standard deduction for salaried employees, making option C a significant point, but the complete abolition of wealth tax is one of its most defining and frequently cited proposals in the context of Indian tax reforms. Option D is incorrect as the committee actually suggested tax treatment adjustments rather than blanket permanent exemptions for those categories. Therefore, option A is the most accurate representation of the task force's specific structural recommendations.

economy: Which of the following is a recommendation of the task force on direct taxes under the chairmanship of Dr Vijay L. Kelka
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