Wealth tax on assets leased

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

05 October 2013 A Company has taken on rent a store for the period of 25 years for running retail business.
Will wealth tax be payable bye lessee i.e. Company in this case where lease tenure is more than 15 years,where wealth tax liability shifts from Lessor to Lessee

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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05 October 2013 the owner will be liable to pay wealth tax as asset belongs to him.

CA Pallav Singhania

CA Pallav Singhania (Expert)
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05 October 2013 Agree with Mr. Sampat..
Lessee will not be held liable for the wealth tax....

Querist : Anonymous

Querist : Anonymous (Querist)

05 October 2013 But section 4(8)(b) of wealth tax act says, in case of lease tenure for the period of 12 years or more, lessee will be liable to pay wealth tax

Querist : Anonymous

Querist : Anonymous (Querist)

05 October 2013 Please clerify

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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03 August 2025 Great query! Let me clarify the wealth tax liability in case of leased assets, especially for long-term leases.
Wealth Tax Liability on Leased Assets:
Key Section: Section 4(8)(b) of the Wealth Tax Act
When an asset (like a building or land) is leased out for a period of 12 years or more, the wealth tax liability shifts from the owner (lessor) to the lessee.
This means:
If lease tenure is less than 12 years, the owner (lessor) pays wealth tax on the asset.
If lease tenure is 12 years or more, the lessee is liable to pay wealth tax on the leased asset.
Your Case:
Lease tenure = 25 years (which is > 12 years).
Therefore, the lessee (company renting the store) is liable to pay wealth tax on the leased asset.
Important Notes:
The lessee is liable only if the asset is included in the list of taxable assets under the Wealth Tax Act (like urban land, buildings, motor cars, jewellery, etc.).
The lessee must include the leased asset’s value in their net wealth for wealth tax purposes.
Summary:
Lease Period Wealth Tax Payer
Less than 12 years Owner (Lessor)
12 years or more Lessee (Tenant)
So in your example, since the lease period is 25 years, the company (lessee) will have to pay wealth tax on the store property during the lease tenure.

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