Income-tax is a very famous and well known direct tax inIndia. But many Income-tax assessees are unaware of the fact that they are also liable to pay wealth-tax and file Wealth-tax returns every year along with their Income-tax returns. In this article , let us try to analyse the various provisions with regard to Wealth-tax and filing requirements with regard to the same.
Who are liable to pay Wealth-tax ?
Every Individual, Hindu Undivided Family and Company are covered by the Provisions of Wealth-tax Act.
Wealth-tax is payable on Net wealth of the above mentioned assessees at the rate of 1% of the amount by which net wealth exceeds Rs. 30,00,000/- (Thirty Lakhs). For example, if the value of Net wealth is 35 Lakhs, the wealth tax payable will be Rs. 5000/- (1% of Rs. 5 Lakhs).
What is Net Wealth ?
Net wealth represents the excess assets over debts. Meaning the value of assets as reduced by the Debts incurred in relation to the assets which are included in the Net Wealth.
Which are the assets to be included in calculation of Wealth for Wealth-tax pursposes?
The following are the assets to be included in Wealth for the purpose of arriving at the Wealth tax liability :-
1) Guest House, Residential House orCommercialBuilding.
2) Motor Cars
3) Jewellery , Bullion, utensils of gold,silver,etc.,
4) Yachts, boats and aircrafts.
5) Urban Land
6) Cash in hand (in excess of Rs. 50000/- in case of Individuals and the entire cash balance in respect of others)
Assets Exempt from Tax
The following assets are exempt from Wealth-tax :-
1) Property held under trust
2) Interest in family property of an HUF
3) Residential building of a former ruler.
4) One house or part of the house at the option of the assesee shall be exempt.
From the aggregate of all assets (excluding exempt assets) , the value of debts owed shall be deducted subject to the following two conditions :-
a) Only debt owned by the assessee on the valuation date are deductible.
b) Debts should have been incurred in relation to those assets which are included in net wealth of the assessee