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incidence of wealth tax (Income Tax)

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This query is : Resolved

Author : Anonymous

( Author )
15 January 2011

please define the incedence of wealth tax


Manmohan ACA, CS

( Expert )
15 January 2011

Incidence of tax in the case of an individual depends upon his residential status and nationality. Whereas in the case of a Hindu Undivided Family and company it depends upon the residential status. Residential status of an assessee is to be judged by the same principles as laid down in section 6 of the Income Tax Act.

In case of an individual who is a citizen of India and his residential status is resident and ordinary resident, the net wealth taxable under the Wealth Tax Act would include the aggregate values of all assets located inside and outside India including deemed assets but excluding exempted assets and deducted by the aggregate value of all debts owed by him on the valuation date which have been incurred in relation to the assets. Similarly in the case of a Hindu Undivided Family which is a resident and ordinary resident or a company which is a resident in India, the net wealth chargeable to wealth tax would include the aggregate value of all assets located inside and outside India including deemed assets but excluding the exempted assets and deducted by the aggregate value of all debts owed by him on the valuation date which have been incurred in relation to the assets.

But in case of an individual Indian citizen whose residential status is either resident but not ordinary resident or non resident, the net wealth taxable under the Wealth Tax Act would only the value of all assets located in India including deemed assets but excluding exempted assets deducted by the aggregate values of all the debts owed by it on the valuation date which have been incurred in relation to the assets. Net of assets/ liabilities located outside India are tax free.

Finally, in the case of a Hindu Undivided Family or a company which are non residents, net wealth chargeable to tax under Wealth Tax Act would include the value of all assets located in India including deemed assets but excluding exempted assets and deducted by the aggregate value of all debts owed by it on the valuation date which have been incurred in relation to the assets. They are not assessed in respect of assets locate outside India.

Here it has to be specifically noted that the debts owed by the assessee on the valuation date is deductible only if such debts had been incurred in relation to those assets which are included in the net wealth of the assessee.


Author : Anonymous

( Author )
17 January 2011

thank you manmohan sir for giving answer of my query


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