Wealth tax

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Balwinder Singh (Querist)
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12 March 2012 PLEASE SOLVE THE FOLLOWING QUESTION

COMPUTE THE NET WEALTH AND WEALTH TAX LIABILITY OF ABC LTD AS ON 31.03.2011. THE COMPANY IS ENGAGED IN JEWELLARY BUSINESS- EXPORTS AND DOMESTIC SAKES:

FACTORY BUILDING 4300000
BANK BALANCES 1220000
UNACCOUNTED CASH BALANCE 650000
SILVER WARE 9400000
GOLD ORNAMENTS 9600000
MOTOR CARS 1500000
GUEST HOUSE IN LONDON 800000

THE COMPANY HAS TAKEN A LOAN OF RS 600000 BY MORTGAGING GUEST HOUSE AND BUILT THE FACTORY PREMISES.

Guest

Guest (Expert)

12 March 2012 Factory building- not a taxable asset since used for commercial purpose.
Bank balance- not a taxable asset as per sec. 2
Unaccounted cash balance- Rs. 650000/- taxable fully.
Silver ware- Rs. 9400000/- fully taxable (assuming they are not stock in trade)
Gold ornametns- Rs. 9600000/- fully taxable
Motor cars- 1500000/- fully taxable
Guest house in london- 800000/- fully taxable

Loan by mortgaging building- not allowed since the loan was taken by mortgaging property and aslo the asset not included in taxable wealth deduction will not be available.

So taxalbe assets: (650000+9400000+9600000+1500000+800000) = 2,19,50,000/-
net taxable wealth after basic exemption of Rs. 30,00,000/- = 1,89,50,000/-
Wealth tax @ 1% = 189500/-

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