2. What is taxation?
A means by which government finance
their expenditures by imposing charges
on citizens and corporate entities.
3. Why Tax is collected?
Government use taxation to encourage or
discourage certain economic decision.
◦ Example: Reduction in taxable personal (or
household) income by the amount paid as
interest on home mortgage loans results in
greater construction activity, and generates
more jobs.
6. Applicability
Section 1
◦ The Wealth Tax Act, 1957 extends to whole of
India.
◦ It came in force since 1-4-1957.
7. Charge / Applicability
Every individual, HUF or company who is
an assessee shall be charged with wealth
tax at the rate of 1% on the amount by
which his net wealth determined on the
basis of his nationality and residential
status on the valuation date exceeds Rs
30,00,000/-.
8. Persons not liable to wealth
tax
Any company registered under section 25 of
the companies act, 1956. [non-profit making
company]
Any co-operative society
Any social club
Any political party
A mutual fund specified in Income tax
9. Meaning of Net Wealth
Particulars Amount
Value of the asset belonging to the assessee on
valuation date
xxx
Add: Deemed wealth u/s 4 xxx
Total Xxx
Less: Assets exempt u/s 5 Xxx
Less: Debts incurred (loan taken) Xxx
Net Wealth Xxx
10. Assets u/s 2 (ea) of the
Wealth Tax Act.
Assets includes Assets excludes
BUILDING
• used for residential purpose
• used for commercial purpose
• guest house
• farm house situated within 25
km form local limits of
muncipality
• residential house given by a
company to its employees
having salary less than 5 lakhs.
• residential or commercial house
forming part of stock in trade.
•House occupied by assessee for
his own business or profession,
• residential house let-out for a
period of 300 days or more
during the year.
11. Assets includes Assets excludes
MOTOR CAR
• Motor car including jeep, SUV
but excluding Heavy motor
vehicles.
• Motor car used in the business
of running on hire.
• Motor car held as stock in trade
in the business.
JEWELLERY
• Jewellery or any other article
made wholly or partially of gold
and silver.
• Jewellery held as stock in trade
in the business.
• gold deposit bonds.
BOATS & AIRCRAFTS
• Boats / aircrafts used by
assessee for commercial
purposes.
• ships
12. Assets includes Assets excludes
URBAN LAND
• urban land on which
construction of a building is
not permitted.
• land occupied by any
building contructed by the
approval of authority
• land held for industrial
purpose for a period of two
years from the date of
acquasition.
• land held by the assessee as
stock in trade for a period of
10 years from the date of
acquasition.
13. Assets includes Assets excludes
CASH
• in case of individual or H.U.F
any amount in excess of Rs
50,000/-
• for others amount not
recorded in the books of
account.
• for individual/ H.U.F any amount
less than Rs 50,000/-
• for others amount recorded in
the books of account.
14. Exemptions available u/s 5.
In the hands of Types of asset
i. Charitable trust
ii. Member of H.U.F.
iii. Ex-ruler property
Property held under trust for any
public purpose of charitable or
religious nature in India
excluding assets of business
carried on by trust.
Any interest in the H.U.F.
property as a member.
Any one building in the
occupation of a ex-ruler which
was his official residence by the
central government.. The let out
buildings are not allowed.
15. iv. Ex- ruler jewellery
v. N.R.I., returning to India for
permanent residence
Jewellery in possession of ex-
ruler recognized as his heir-loon
jewellery but personal jewellery
is not exempt.
•The assessee should be an
Indian citizen or of Indian origin.
•He returns to India with an
intention to permanently reside
in India.
•Money and value of assets
brought by him or assets
purchased out of money kept in
N.R.I account
•Time limit for exemption is 1yr
before or 7yrs after the date of
return.
16. vi. Individual / H.U.F. •one house or part of the house
or plot of land upto 500sq.m.
•If house is owned by the firm,
then the partners may claim
exemption in the proportion of
their share in that asset.
18. Limitation of time for assessment
Nature of Obligation Time limit
1. Intimation for any tax or
interest found due after
adjusting refund.
Within two years from the end
of the assessment year.
2. Service of notice requiring
assessee’s attendance,
production of evidence in
support of return of income.
Within 12months from the end
of the month in which return is
furnished.
3. Service of notice for
reassessment.
a) Where wealth which has
escaped assessment has
exceed 10 lakhs.
a. Within 4yrs from end of the
relevant assessment year.
19. b) Where wealth which has
escaped assessment is 10
lakhs or more.
b. Within 6yrs from the end of
the relevant assessment year.
4. Passing assessment order u/s
16
Within 2 yrs from the end of the
assessment year.
