Wealth tax :-
As per section 3(2) of the wealth tax 1957, from 1993-94 , every individual , HUF and company is liable to pay wealth tax. Wealth tax is charged on the basis of
1. The quantum of net wealth chargeable to tax under the Act.
2. The time aspect i.e. Net wealth on valuation date
3. Location of asset or place aspect
4. Ownership aspect.
Wealth tax is charged on the assets in excess of 30 lacs at the rate of 1%.
What is called as wealth
Let’s take an example .. A wealthy person like Tata birla who has 10 houses , 15 cars. It has a private yacht, boat and also a private plane or aircraft. Her wife wears new jewellary on every occasion. His cash balance is always full of money. He has urban land around the world.
1. House – whether residential or commercial purpose or otherwise used as guest house.The let out property must be given for minimum period of 300 days during the p/y.
2. Jewellary – not includes Gold deposit bonds issued under Gold deposit scheme notified by CG.
3. Cash must be in excess of Rs.50000
Individual includes :
1. A natural person/human being
2. Hindu deity
3. Group of individual, being trustees of trust.
4. AOP, where share of members are unknown.
Includes a joint Jain family but not a Hindu converts into Christianity through a Hindu law of succession.
1. Any Indian company
2. Any body corporate incorporated by or under the law of a company o/s india
3. Any institute ,association or body which is taxable under Income tax act 1922.
4. Any institute ,association or body whether incorporated or not whether Indian or non Indian , which is declared by general or special order of the board to be a Co.
Person not liable to wealth tax:-
A. Any company registered under section 25 of the Co. Act 1956
B. Any cooperative society
C. Any social club
D. Any political party within the meaning of explanation to section 13 A of the Income Tax Act
E. Any mutual fund within the meaning of section 10(23D) of the income tax act.
Incidence of wealth tax :-
Resident and ordinary resident :-
All assets – debts in India
All assets and liabilities outside India will also be counted
Not ordinary resident and non resident :-
All assets – debts in India.
The valuation date for wealth tax is the last day of the previous year as defined in the Section 3 of Income tax act ( Banarasi dass v/s CWT )