• Indian Wealth Tax Income tax department

    Wealth tax is a direct tax, which is charged on the net wealth of the assessee. It is a tax on the benefits derived from ownership of property. The tax is to be paid year after year on the same property on its market value, whether or not such property yields any income. Wealth tax, in India, is levied under Wealth-tax Act, 1957. The Income tax department under the Department of Revenue in the Ministry of Finance administers the Wealth Tax Act, 1957 as well as the Wealth Tax Rules framed there under.

    Under the Act, the tax is charged in respect of the wealth held during the assessment year by the following persons :-

    Individual

    Hindu Undivided Family(HUF)

    Company

    Chargeability to tax also depends upon the residential status of the assessee same as the residential status for the purpose of the Income Tax Act.

    Wealth tax is not levied on productive assets, hence investments in shares, debentures, UTI, mutual funds, etc are exempt from it. The assets chargeable to wealth tax are :-

    Guest house, residential house, commercial building

    Motor car

    Jewellery, bullion, utensils of gold, silver etc

    Yachts, boats and aircrafts

    Urban land

    Cash in hand(in excess of 50,000), only for Individual & HUF

    The following will not be included in Assets :-

    Any of the above if held as Stock in trade.

    A house held for business or profession.

    Any property in nature of commercial complex.

    A house let out for more than 300 days in a year.

    Gold deposit bond.

    A residential house allotted by a Company to an employee, or an Officer, or a Whole Time Director ( Gross salary i.e. excluding perquisites and before Standard Deduction of such Employee, Officer, Director should be less than Rs. 5,00,000).

    The Assets exempt from Wealth tax are :-

    Property held under a trust.

    Interest of the assessee in the coparcenary property of a HUF of which he is a member.

    Residential building of a former ruler.

    Assets belonging to Indian repatriates.

    One house or a part of house or a plot of land not exceeding 500sq.mts,for individual & HUF assessee.

    Wealth tax is chargeable in respect of Net wealth corresponding to Valuation date.(Net wealth means all assets less loans taken to acquire those assets. Valuation date means 31st March of immediately preceding the assessment year). In other words, the value of the taxable assets on the valuation date is clubbed together and is reduced by the amount of debt owed by the assessee. The net wealth so arrived at is charged to tax at the specified rates. Wealth tax is charged @ 1% of the amount by which the net wealth exceeds Rs. 15 Lakhs.


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