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Definition of guest house under wealth tax

Suraj Agarwal (Self Practitioner in Income Tax & GST) (782 Points)

05 May 2012

Hello Friends,

Plz. clearify the position of Guest House in the Wealth Tax Act.

Is there any limit (distance) from the local limit for the guest house to be an asset u/s 2(ea) ??

Your early response will be appreciated.

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3 Replies

DIPESH VASA Helping Hand!!!!! (CA FINAL ) (441 Points)
Replied 05 May 2012

Hii

Under the wealth tax Act only defination of farm house u/s 2(ea)(1) is given i.e an house within 25 km from ANY municipal party and population is more than 10000

So other than the above will be consider as guest house

hope it is clear to you

Suraj Agarwal (Self Practitioner in Income Tax & GST) (782 Points)
Replied 05 May 2012

Originally posted by : DIPESH VASA Helping Hand!!!!!
	Hii Under the wealth tax Act only defination of farm house u/s 2(ea)(1) is given i.e an house within 25 km from ANY municipal party and population is more than 10000 So other than the above will be consider as guest house hope it is clear to you

Thanks for your attention but,

as you said that "OTHER THAN ABOVE" that means

either those house which are beyond 25 km from ANY municipal party and population is more than 10000

OR..........

within 25 km from ANY municipal party and population is less than 10000 ??

then what will be relivance of defition of Farm House ?? So, Give ur reply in detail.

CA Y D (Chartered Accountant) (76 Points)
Replied 05 May 2012

I think u r confusing

THORETICALLY

let me take an example to under stand it THORETICALLY

Farm House A is situated say 30 km from kolkata (Population. >10000)

& 6km away from Howrah (Population <10000)

Now 1st we hv to see population

since population of howrah is less than 10000 then we will just ignore the data as if it was never provided to us

population of kol greater than 10000 NOW WE hv to check whether FARM HOUSE is within 25 km or not

since NOT within 25km (since 35 km)

thereforenot an asseat for Wealth Tax i.e. NO Wealth Tax

PRACTICALLY & CONCEPTUALLY

Now let us get into some real world

Whats the logic behind excl farm house >25km ?

Farm House means a House constructed on an AGRICULTURAL LAND

Recall Cap gains, "ANY AGRI LAND SITUATED OUTSIDE 8KM IS NOT A CA"

same here but now its 25KM

Both are incentive provided by Govt

YOUR CONFUSION !!!

Now u just hv to check whether ur farm house is within 25 KM of ANY Municipality (Population>25000km or NOT) if not then HURAYYYYYYYYY No Wealth Tax

In real world scenerio, u just hv to check whether ur farm house is within 25 KM of ANY Municipality (Population>10000km or NOT) if not then HURRAYYYYYYY NO CAP GAINS on transfer of such Capital Asset [since not even a CAPITAL ASSET as per section 2(14)]

THERE ARE MANY ADDITINAL TECHICAL POINTS WHICH I M NOT DISCUSSING HERE

I HOPE ur query is now resolved.

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