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 Which of the following taxes is/are withdrawn or abolished?
  • a)
    Interest tax
  • b)
    Estate duty
  • c)
    Gift tax
  • d)
    All the above
Correct answer is option 'D'. Can you explain this answer?
Verified Answer
Which of the following taxes is/are withdrawn or abolished?a)Interest ...
Interest tax was withdrawn in 2000-01, estate duty abolished in 1985 and gift tax in 1998-99.
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Which of the following taxes is/are withdrawn or abolished?a)Interest ...
Withdrawn or abolished taxes:
The correct answer is option 'D', which means that all of the following taxes have been withdrawn or abolished:

1. Interest tax:
The interest tax refers to a tax levied on the interest earned from various financial instruments such as deposits, loans, bonds, etc. In the past, interest tax was imposed on individuals and businesses as a means to generate revenue for the government. However, over time, many countries have either completely withdrawn or significantly reduced the interest tax.

2. Estate duty:
Estate duty, also known as estate tax or inheritance tax, is a tax levied on the transfer of property or assets upon the death of an individual. It is generally based on the value of the estate left behind by the deceased. Estate duty has been abolished in several countries, as it was considered to be a burden on the beneficiaries and an impediment to the smooth transfer of wealth.

3. Gift tax:
Gift tax is a tax imposed on the transfer of assets or property from one person to another without any consideration or compensation. It is intended to prevent individuals from avoiding estate taxes by giving away their assets before their death. However, gift taxes have been abolished in some countries or have undergone significant reforms to simplify the tax system and reduce administrative burdens.

Reasons for withdrawal or abolition:
There are several reasons why these taxes may have been withdrawn or abolished:

1. Administrative burdens: These taxes often require complex reporting and compliance procedures, which can be burdensome for individuals and businesses. The withdrawal or abolition of these taxes simplifies the tax system and reduces administrative costs for both taxpayers and the government.

2. Economic considerations: The withdrawal or reduction of these taxes may be part of broader tax reforms aimed at stimulating economic growth and investment. By eliminating or reducing taxes on interest income, estates, and gifts, governments can encourage savings, investment, and wealth accumulation.

3. Competitiveness: In a globalized economy, countries may choose to eliminate certain taxes to attract foreign investment and remain competitive. By removing or reducing these taxes, countries can create a more favorable business environment and promote economic development.

4. Equity and fairness: Some argue that these taxes are inherently unfair as they impose additional burdens on individuals and businesses without necessarily contributing to the overall welfare of society. The withdrawal or abolition of these taxes can be seen as a step towards a fairer and more equitable tax system.

In conclusion, the interest tax, estate duty, and gift tax have been withdrawn or abolished in various countries due to reasons such as administrative burdens, economic considerations, competitiveness, and concerns regarding fairness and equity.
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Which of the following taxes is/are withdrawn or abolished?a)Interest taxb)Estate dutyc)Gift taxd)All the aboveCorrect answer is option 'D'. Can you explain this answer?
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