Basic concept on Wealth Tax

Wealth Tax Basic Concept

Applicability: whole of India from 1st April, 1957.

Chargeability: On net Wealth of individual, HUF & Company @ 1% in excess of Rs. 3,00,000 on

                          Valuation Date.

Valuation Date: 31st march immedialely preceding the assessment year.

NetWealth calaulation:

Net Wealth means------

               Value of assets on valuation date         ********

        (+)  Deemed assets u/s 4                              ********

        (-)   Assets exempt u/s 5                                 ********

                          Chargeable Assets                        ********

        (-)  Debts owed by assessee incurred

                in relation to assets included

                in chargeable assets                              *********

                                                      Net Wealth          *********

Assets: Only these 6 assts are taxable in Wealth Tax----

(1) House; (2) Motor car; (3) Jewellary, bullion, furniture, utensils, etc. made of precious metal; (4) Yachts, boats and aircrafts; (5) Urban Land; and (6)cash in Hand.

Deemed Assets u/s 4:

(A) only For Individual

i) Assets transferred to spouse; ii) Assets held by a minor child; ii) Assets tranferred to a person or AOP for benifits of the Individual, his/her spouse; iv) Assets transferred under revocable transfer; v) Assets transferred to son's wife. vi) Assets transferred to person or AOP for the benifits of son's wife; vii) converted property; viii) Holder of an impartible estate.

(B) For Individual, HUF, Company

i) Interest in a firm or AOP; ii) Gifts by Book entries; iii) Property held by a member under House Building Scheme; iv) Property (Building) right in building acquired under part performance. Assets

Exempt u/s 5:

These assets are exempted under Wealth Tax----

i) Property held under a Trust; ii) Coparcenary interest in property of HUF; iii) One official residence of former ruler; iv) Heirloom jewellary of a former Ruler; v) Assets brought in India by citizen of India or persons of Indian Origin; vi) One house or part of house of Individual or HUF.

Debts Owed: Debts outstanding on valuation date in relation to assets included in net wealth of 

                        the assessee. Debts secured on the assets are not deductable.

Rounding off of Net Wealth: Nearest multiple of one hundred.

Rounding off of Tax: To the nearest of rupee and part thereof.