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Wealth Tax under Direct Tax

Posted @ April 16, 2013, 4:10 am under (Wealth Tax)

Wealth Tax under Direct Tax

Wealth tax is a direct tax, which is charged on the net wealth of the assessee.  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.

 

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.

 

 

 

 

 

 

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