are blissfully ignorant about it.
For example, chartered accountants point out that not many people are aware that they are liable to pay 1% wealth tax every year on any gold andjewellery they own above Rs 15 lakh in value. Given the recent spurt in gold prices, a surprisingly large number would fall into this tax net, not just `high net worth' individuals.
"We advise our clients that they should re-value their gold and ornaments every three years,'' says K M Lakdavala, a chartered accountant. "If the total value of the gold, ornaments and jewellery they own is above Rs 15 lakh, they should definitely be paying wealth tax on it.'' The first 15 lakh of your total assets is exempt.
Another little-known fact is that the government has stipulated how much a registered jeweller can charge to value your ornaments and people should only go to a registered valuer. An accountant says she just saved her client several thousand rupees when she told her the limits on fees chargable. For instance, a jeweller can charge only 0.5% of the value of ornaments worth Rs 5 lakh, and 0.2% of the value on the next Rs 10 lakhs. On the next Rs 40 lakh worth of jewellery, the jeweller must charge 0.1% of the value, and perhaps a small premium if he or she does a home visit. However, most jewellers charge a flat 0.25-0.3% of the value, which is almost three times what they should be charging.
Says wealth manager Sujata Kabraji, "Most people have no idea where to go to value their jewellery, nor which date to use as the benchmark, given that gold pricesfluctuate so much during the year. In fact, most people are not even aware that they are liable to pay 1% wealth tax on items like gold, silver, or a second house.''
For tax purposes, the definition of 'wealth' includes jewellery, bullion, furniture or utensils made of precious metals, says a tax adviser. It also includes your car, and your second house if it is lying vacant. The property you live in is not deemed liable.
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