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wealth tax

sneha (student) (45 Points)

07 January 2009

MR. X AND MRS. X GIVE INTEREST FREE UNSECURED LOAN TO A FIRM IN WHICH THEIR 2 SON ARE THE ONLY PARTNERS.WILL THE LOAN GIVEN BY THEM WILL BE INCLUDED IN THEIR WEALTH FOR WEALTH TAX COMPUTATION?

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5 Replies

Hitesh Kothari (Article) (144 Points)
Replied 07 January 2009

Dear Sneha,

In case of Individual only cash exceeding 50,000/- is taxable under wealth tax, Bank Balnce is not taxable under wealth tax. If loan is given in cash then it will be taxable in the hands of parents and further more if loan os converted into any other asset which is liable to tax under the provision of wealth tax then that will be clubbed.

Thanks & Regards

Hitesh

CA. Ashok shah (CHARTERED ACCOUNTANT) (333 Points)
Replied 07 January 2009

Loan given to firm is not liable for wealth-tax as it does not come under the purview of Assets as defined u/s.2 (ea) and also of Deemed Assets as defined u/s.4 of the Wealth Tax Act which are liable for wealth tax.

Atul Kumar (CA) (504 Points)
Replied 13 January 2009

Ashok is right.

kiransingh (Chartered Accountant) (54 Points)
Replied 16 January 2009

Loan given to firm is not covered under the definition of asset under wealth tax and even loan/asset given/transferred to son is not covered under the deemed assets SEC -4.