Wealth tax

Q2. How to calculate the value of a Urban Land? Also How to value a house / shop?

  Reply-

Urban land can be get valued from an approved valuer, which is based on the prevailing fair market  rate and other relevant factors.

However it is important to note that (

1. the Urban land on which construction is not permitted by any law , for the time being in force, will not be treated as an asset.

2. Land on which construction has started -does not remains land and as such it is also not treated as an asset.

3. Industrial plots can be held for a period of 2 years from the date of acquisition. After 2 years, it can be treated as an asset.

4. Land can be held upto 10 years as stock in trade. Till 10 years it is not an asset.

The manner in which in which valuation of a building will be carried out has been mentioned in PArt B of Schedule III.

You can refer Schedule III  which is dealing with the valuation aspect of all  types of  Assets. 

That becomes really interesting. If a person has a couple of lands and a house, can he / she show one of the land as urban land and pay the WT every year and show the other land as stock in trade and pay the income tax on business income after the sale?

Yet another interesting question. Can a person show both business income (for example land as stock in trade) and salary income? Which ITR form is designated for such a person?

There is no restriction in showing the land as stock in trade for a person who is engaged in the business of purchasing of land and developing the same and selling the same. His income results into profits from business. 

A salaried person can also carry on such business, subject to his terms of employment. For Business as well as salary income , he can file his return in ITR 4S or ITR 4 -as the case may be.