Wealth tax

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Querist : Anonymous

Querist : Anonymous (Querist)

11 October 2013 On a land, wealth tax is applicable on present guideline or market value?

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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11 October 2013 Land has to be valued as per Rules 3 to 8.

Querist : Anonymous

Querist : Anonymous (Querist)

12 October 2013 Sir, it is as per guidelines or market value?

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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13 October 2013 Please elaborate your query.

Querist : Anonymous

Querist : Anonymous (Querist)

15 October 2013 Sir, what i mean to ask is that if there is a land and its market value as on 31st march is different than the guideline value as denoted by government then for wealth tax purpose, which one is to be considered?

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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03 August 2025 For Wealth Tax purposes, land is not valued based on market value or government guideline value directly. Instead, the value must be determined as per the Wealth-tax Rules, particularly Rules 3 to 8 of Schedule III of the Wealth-tax Act, 1957.
✅ So, which value is used?
➡ Neither the market value nor the guideline value is directly adopted.
Instead, the value is calculated based on a formulaic method prescribed in Schedule III of the Act.

🧮 Here's how it's generally valued:
1. For urban land or non-agricultural land:
Value is computed using the Capitalized Rent Method or Net Maintainable Rent (NMR) if the property is yielding rent.
If not yielding rent, then cost of acquisition + indexed increase is considered subject to Rule 3.
2. If property is not let out:
Fair market value (FMV) is determined using the rules. For example:
Rule 8: If the property is not yielding income, it may be referred to a Registered Valuer.
Rule 20: Allows valuation based on comparable sales, with adjustments.
📝 In Practice:
The Assessing Officer may refer the valuation to a Departmental Valuation Officer (DVO).
The Guideline value (circle rate) may serve as a floor/base reference, but it is not conclusive.
A registered valuer’s report is often used to justify the valuation.
🔍 Summary:
Basis Accepted? Notes
Market Value ❌ Not directly, unless backed by valuer’s report.
Guideline Value ❌ May be indicative, but not prescribed.
Valuation as per Rules 3 to 8 (Schedule III) ✅ Mandatory under Wealth-tax Act.
If you're computing wealth tax on land, it's best to obtain a valuation report from a registered valuer in accordance with Schedule III. This ensures defensibility in case of scrutiny or assessment.

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