Wealth tax


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Wealth tax

  2. 2. Applicability of Wealth Tax WWW.SIMPLETAXINDIA.NET  Persons covered under Wealth Tax  An individual and  Hindu Undivided Family (HUF) and  a company  Persons not covered under Wealth tax  Co-operative Society,  Companies register u/s 25 of companies Act  Social club  Political parties ,  RBI,  Mutual Fund registered under section 10(23D) of Income Tax Act.  Exemption Limit  Person whose net wealth on the valuation date (i.e. 31st March) up to Rs 30,00,000 (wef Ay 2010-11) is liable for Wealth Tax
  3. 3. Rate of Wealth Tax & Valuation Date WWW.SIMPLETAXINDIA.NET  Wealth Tax is levied @1% on net wealth in excess of Rs 30,00,000.  No cess or surcharge is levied on Wealth Tax.  Valuation date is March 31 immediately preceding the Assessment year.  Net wealth means excess of assets over debts  Assets includes deemed assets  Assets do not includes exempted assets
  4. 4. Wealth Tax and residential status WWW.SIMPLETAXINDIA.NET  A resident and ordinarily resident individual who is an Indian citizen, a resident and ordinarily resident HUF and every resident company is liable to Wealth Tax in respect of world assets (i.e. assets located in India as well as outside India).  However, an individual who is not a citizen of India (may be resident and ordinarily resident or not), a resident but not ordinarily resident individual/HUF and every non-resident (may be individual or HUF or company) is liable to Wealth Tax only in respect of assets located in India  Residential status of every person will be ascertained in the same manner as is determined under Income Tax Act.
  5. 5. Assets covered under Wealth Tax (Movable Property) WWW.SIMPLETAXINDIA.NET  Motor cars (other than those used by the assessee in the business of running them on hire or used by the assessee as stock-in-trade).  Yachts, boats and aircrafts (other than those used by the assessee for commercial purposes).  Jewellery, bullion, furniture, utensils or any other article made wholly or partly of gold, silver, platinum or any other precious metal or any alloy containing one or more precious metals (other than used by the assessee as stock-in-trade)
  6. 6. Assets covered under Wealth Tax (Immovable Property) WWW.SIMPLETAXINDIA.NET  Any building or land appurtenant thereto (including a farm house) situated within 25 kms of a Municipality or Cantonment Board, excluding  Any residential property which has been let-out for a minimum period of 300 days in the previous year.  Any house occupied by the assessee for the purposes of any business or profession carried on by him.  Commercial establishments or complexes.  A house meant exclusively for residential purposes and which is allotted by a company to an employee or an officer or a director who is in whole-time employment, having a gross annual salary of less than Rs 10,00,000.  Any house for residential or commercial purposes
  7. 7. Assets covered under Wealth Tax (Immovable Property cont…) WWW.SIMPLETAXINDIA.NET  Urban land, other than the following  Land on which construction is not permissible under any law for the time being in force; or  Any land on which construction is done with the approval of the appropriate authority; or  Any unused land held by the assessee for industrial purposes; it will be excluded for a period of two years from the date of its acquisition by him; or  Any land held by the assessee as stock-in-trade; it will be excluded for a period of ten years from the date of acquisition by him
  8. 8. Assets covered under Wealth Tax Cash in Hand WWW.SIMPLETAXINDIA.NET  In case of an individual and HUF :  Cash in hand in excess of Rs 50,000  In the case of a company :  any amount not recorded in the books of account.
  9. 9. Deemed ownership in respect of assets transferred without consideration WWW.SIMPLETAXINDIA.NET  A person will be treated as deemed owner in respect of assets transferred by him/her (without adequate consideration)  to his/her HUF or  to his/ her spouse or  to his/ her son's wife or  to a person for his/her benefit or for the benefit of his/ her spouse or for the benefit of his/ her son's wife.
  10. 10. Taxability of assets belonging to minor child WWW.SIMPLETAXINDIA.NET  Assets belonging to a minor child will be clubbed along with the net wealth of his/ her parent.  No clubbing will be done in respect of assets belonging to a minor child suffering from any disability specified under section 8oU of the Income Tax Act.  Further, clubbing provisions will not apply in respect of any asset acquired by the minor out of income arising to the child by application of his/her skill, talent or specialized knowledge and experience, etc.
  11. 11. Taxability of assets belonging to partnership firm WWW.SIMPLETAXINDIA.NET  A partnership firm is not liable to Wealth Tax.  However, value of taxable asset of the firm is to be computed in the prescribed manner and the share of each partner in the assets of the firm will be included along with the net wealth of each partner.
  12. 12. Assets exempt from Wealth Tax WWW.SIMPLETAXINDIA.NET  A person can claim exemption in respect of few assets.  Exemption in respect of one house or part of a house or a plot of land (not exceeding 500 Sq. Mtrs.) available to individuals and HUFs.
  13. 13. Debt in respect of taxable assets WWW.SIMPLETAXINDIA.NET  From the total value of taxable assets the value of debt owed in respect of taxable assets is to be deducted to arrive at the value of net taxable assets.
  14. 14. Return of wealth WWW.SIMPLETAXINDIA.NET  Every individual, HUF and company whose net wealth on valuation date (i.e. 31" March) exceeds 30,00,000 shall file the return of Wealth Tax.  The due dates for filing the return of Wealth Tax are same as due dates for filing the Return of Income specified under section 139 of Income Tax Act (i.e. if assessee is liable to audit, due date will be 30"‘ September and in other case the due date will be 31 "July).
  15. 15. Belated or revised return WWW.SIMPLETAXINDIA.NET  A belated return or revised return can be filed within a period of one year from the end of the assessment year or before completion of assessment, whichever is earlier.  Interest @ 1% per month or part of the month is levied for delay in filing the return of Wealth Tax.
  16. 16. Major penalties WWW.SIMPLETAXINDIA.NET  Penalty up to 100% of the amount of tax in arrears can be levied in case of non-payment of Wealth Tax.  Penalty in case of concealment of wealth can be up to 500% of tax sought to be avoided.
  17. 17. Wealth Tax :Are you liable to pay ?  This Slideshow should not be construed as an exhaustive statement of the law.  For complete details refer to the Wealth-tax Act, 1957 BY :WWW.SIMPLETAXINDIA.NET WWW.SIMPLETAXINDIA.NET Disclaimer Thanks