Wealth Tax

Taxache (Strategy) (36 Points)

01 July 2011  

Hi

Is there a way to reduce the liability of wealth tax. It is 1% of wealth exceeding above 30 lakhs. Lets say if a person own two homes, one is self-occupied and other is rented. Assume The rented home's market value is 40 lakhs and there is a loan of Rs 5 laks on this rented home as well.

The his wealth from property = 40 - 5 = 35 lakhs

wealth exceeding 30 lakhs = 35-30 = 5 lakhs

Jewellery and other items = 7 lakhs

Net wealth chargable under wealth tax act, 1957 = 5 + 7 = 12 lakhs

Wealth tax = 1 % 12 lakhs = 12,000

 

Now the question is how to reduce the wealth tax liability?

- Should this person tranfer his second home to his spouse's name or to his minor/major child to save tax?

 

I have doubt that even doing so would make the assessee as deemed owner and would still have to pay tax.

Please suggest.