Companies registered u/s 25 of Companies Act, 1956, Co-operative Societies, Social Club, Political Party and Mutual Funds, RBI.
Chargeability of Wealth Tax
Tax payable at 1% on the Taxable Net Wealth in excess of Rs.30 Lakhs, determined on the basis of Nationality, Residential Status, Location of Assets as on the Valuation Date.
Buildings or Lands appurtenant thereto, Motor Cars, Jewellery/Bullions/Furniture, Yachts/Boats/Aircrafts, Urban Land, Cash in hand( Individuals & HUF – in excess of Rs.50,000 / Others-Amounts not recorded in the Books).
Assets Excluded – Buildings
Residential House of Company allotted to Officer with Gross Salary less than Rs.10 Lakhs p.a. / Held as Stock in Trade / Used for Business or Profession / Residential House let out for 300 days during PY / Commercial Establishment or Complex
Assets Excluded – Motor Cars
Used for Business of Hire / Held as Stock in Trade
Assets Excluded – Jewellery
Stock in Trade / Gold Deposit Bonds under Gold Deposit Scheme, 1999.
Assets Excluded – Yachts, Boats / Aircrafts
Used for Commercial Purposes / Ship.
Assets Excluded – Urban Land
Land on which construction is prohibited / requires approval from Authorities under any law / Industrial purposes for 2 years from acquisition / Stock in Trade for 10 years
Assets Excluded – Cash in Hand
For Individual / HUF – upto Rs.50,000,
For Others – amount recorded in Books
Transfer to Spouse directly/indirectly for inadequate consideration,
Assets held by the Minor,
Transfer to any AOP/any person for the benefit of Spouse,
Revocable transfer to Son’s Wife for inadequate consideration
Conversion of Individual Property into HUF Property,
Transfer to any person by Book Entries or as Gift,
Transfer u/s 53A of Transfer of Property Act, 1872.
Exemptions – Wealth Tax Liability
Charitable Trusts / Funds / Institutions: All Assets held under Trust for Charitable or Public Purpose.
Members of HUF: Interest in HUF Property as Co-Parcener.
Ex-Ruler: Heirloom Jewellery and any one building in his occupation declared as his Official Residence / Palace.
NRIs returning for Permanent Residence: Assets acquired out of monies brought in and proceeds of assets brought in for 7 successive AYs.
Individual / HUF: Any one house or part of house or one plot of land not exceeding 500 Sq.Mtr.
VALUATION OF ASSETS
Gross Maintainable Rent (GMR)
Property let out: GMR = Annual Rent Received / Receivable*, or Value assessed by Local Authority whichever is higher.
Property not let out: If Municipal Rent is available, GMR = Municipal Rent, otherwise Fair Rent.
Net Maintainable Rent (NMR)
GMR Less Municipal Taxes levied by Local Authority Less 15% of GMR.
Capitalisation of NMR (CNMR)
If property is constructed on
NMR x 12.5
Unexpired Lease Period
50 years or more
Less than 50 years
NMR x 10
NMR x 8
Substituted NMR (SNMR)
Computation = Higher of CNMR and Cost of Acquisition / Construction plus Cost of any Improvement.
Acquisition or Construction is completed after 31.03.1974,
Exceptions to Rule of SNMR for one Building
Such Building is used for own residential purposes throughout the relevant PY
The Actual Cost of Acquisition or Construction does not exceed:
If Building situated at
Mumbai / Delhi / Kolkata / Chennai
Any other place
Rs. 50 Lakhs
Rs. 25 Lakhs
Determination of Adjusted Net Maintainable Rent
Unbuilt Area (UA): The part of Aggregate Area in which no building has been erected.
Aggregate Area (A): Area in which property is built + Unbuilt Area(UA0
Least of amount recovered as Unearned Increase and 50% of SNMR
Determination of Annual Rent
Annual Rent Received / Receivable
Municipal taxes borne by tenant
1/9 of actual rent if tenant bear the repair expenses
Interest @ 15% p.a. on the amount of deposit (calculate outstanding amount on monthly basis) made by tenant provided deposit in not in nature of advance rent for 3 months or less
Amount received as premium or otherwise for leasing the property as divided by the period of lease
Any other payment for the use of the property by whatever name called the value of benefits or perquisites, whether convertible to money or not, obtained from tenant in respect of any obligation of owner.
Assets of Business [Rule 14]
Value of Taxable Assets is aggregate of – (a) Depreciable Assets at their WDV, (b) Non-Depreciable Assets at Book Value, (c) Closing Stock at value adopted for Income tax purposes, and (d) Other Assets not disclosed in B/S, in accordance with Schedule III
Interest of Partners / Members in a Firm / AOP
Net Wealth is allocated as under –
To the extent of Capital Contribution – In the Capital Contribution Ratio.
Excess in Exempted Asset included in Net Wealth of the Firm / AOP =
Value of Life Assets = Average Annual Income (after exps) based on past 3 years x Multiple Factor (Schedule III)
[Rule 18 & 19]
Estimated as per Realizable Value, if sold in the Open Market, i.e. at Fair Market Value
Report of a Registered Valuer required if FMV of Jewellery exceeds Rs. 5 Lakhs.
In case of Saleable Asset: Price at which it can be sold in the Open Market,
In case of Others: As per CBDT Guidelines
Return of Wealth
Person other than Company
Subject to audit under Income Tax / Any other law
Not subject to Audit
Company required to furnish a Report u/s 92E
30th September of Relevant Assessment Year(RAY)
30th September of RAY
31st July of RAY
30th November of RAY
Belated Return / Revised
One year before end of AY or completion of Assessment, whichever is earlier
Reference to Valuation Officer
If valued by Registered Valuer: Value of Asset declared < FMV
Other Cases: FMV exceeds Value of Asset as returned, by more than 33 1/3% or Rs.50,000
Jurisdiction of Valuation Officer
Assistant Valuation Officer
District Valuation Officer
Upto Rs. 40 Lakhs
Upto Rs. 300 Lakhs
Above Rs 300 Lakhs
Concealment of Net Wealth
Deemed to have Net Wealth if –
Fails to offer satisfactory explanation,
Fails to substantiate explanation,
Fails to file return of wealth without reasonable cause,
Undisclosed Assets found during search,
Value returned is less than 70% of the value of such asset determined in assessment
Offers a false explanation
Liable to file return and pay tax, if the deceased has not executed any will. Residential Status and Tax Status will be same as the deceased.
Liable to file return and pay tax, if the deceased has executed a will. Residential Status and Tax Status will be same as the deceased.