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WEALTH TAX LIABILITY OF PVT LTD COMPANIES

Rajesh A M.com,MBA,ACS,LLB (Customs Broker International logistics operator and FTP Consultant) (100 Points)

02 December 2008

Can i have the Walth Tax remitt deadlines and return filing compliances for a Pvt Ltd Company with Form details? What are the items considered for wealth tax and how it is worked out?

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7 Replies

CA. Amit Daga (Finance Controller CA. CS. CFA. CIFRS. M.COM. ) (9017 Points)
Replied 03 December 2008

Wealth Tax

Wealth tax is a direct tax, which is charged on the net wealth of the assessee. It is a tax on the benefits derived from ownership of property. The tax is to be paid year after year on the same property on its market value, whether or not such property yields any income. Wealth tax, in India, is levied under Wealth-tax Act, 1957. The Income tax department under the Department of Revenue in the Ministry of Finance administers the Wealth Tax Act, 1957 as well as the Wealth Tax Rules framed there under.

Under the Act, the tax is charged in respect of the wealth held during the assessment year by the following persons :-

Individual
Hindu Undivided Family(HUF)
Company

Chargeability to tax also depends upon the residential status of the assessee same as the residential status for the purpose of the Income Tax Act.

Wealth tax is not levied on productive assets, hence investments in shares, debentures, UTI, mutual funds, etc are exempt from it. The assets chargeable to wealth tax are :-

Guest house, residential house, commercial building
Motor car
Jewellery, bullion, utensils of gold, silver etc
Yachts, boats and aircrafts
Urban land
Cash in hand(in excess of 50,000), only for Individual & HUF

The following will not be included in Assets :-

Any of the above if held as Stock in trade.
A house held for business or profession.
Any property in nature of commercial complex.
A house let out for more than 300 days in a year.
Gold deposit bond.
A residential house allotted by a Company to an employee, or an Officer, or a Whole Time Director ( Gross salary i.e. excluding perquisites and before Standard Deduction of such Employee, Officer, Director should be less than Rs. 5,00,000).

The Assets exempt from Wealth tax are :-

Property held under a trust.
Interest of the assessee in the coparcenary property of a HUF of which he is a member.
Residential building of a former ruler.
Assets belonging to Indian repatriates.
One house or a part of house or a plot of land not exceeding 500sq.mts,for individual & HUF assessee.

Wealth tax is chargeable in respect of Net wealth corresponding to Valuation date.(Net wealth means all assets less loans taken to acquire those assets. Valuation date means 31st March of immediately preceding the assessment year). In other words, the value of the taxable assets on the valuation date is clubbed together and is reduced by the amount of debt owed by the assessee. The net wealth so arrived at is charged to tax at the specified rates. Wealth tax is charged @ 1% of the amount by which the net wealth exceeds Rs.15 Lakhs.

CA. Amit Daga (Finance Controller CA. CS. CFA. CIFRS. M.COM. ) (9017 Points)
Replied 03 December 2008

Wealth Tax on Companies

Wealth tax is a direct tax, which is charged on the 'net wealth' of the 'assessee' under the Wealth Tax Act. All companies (public or private) are liable to wealth-tax if their taxable 'net wealth' exceeds the prescribed limits. All the companies have thus been brought at par with other wealth-tax assesses.

Net wealth of a company is the excess of the 'aggregate value of specified assets' belonging to the company on the valuation date over the 'aggregate value of debts owned by the company' that are incurred in relation to the said assets.

Rajesh A M.com,MBA,ACS,LLB (Customs Broker International logistics operator and FTP Consultant) (100 Points)
Replied 03 December 2008

Thanks for your detailed explanation

kalpana (Auditing) (82 Points)
Replied 19 November 2009

Wealth tax is not levied on productive assets, hence investments in shares, debentures, UTI, mutual funds, etc are exempt from it. ??

Can i know the source of this? can i get the circular or notification in which this is related

CA Devanshi Gandhi (Ajani) (FCA DISA Mcom CIFRS & LLB) (9058 Points)
Replied 19 November 2009

investments in shares, debentures, UTI, mutual funds

above are not covered by the defination of wealth so they are not taxable

kalpana (Auditing) (82 Points)
Replied 19 November 2009

But as per finance act 1992, it has been stated that from 1992-93 the share , securites etc are not covered under the wealth tax. i want to know acc to which quotes this has been removed.

waiting for the reply