0 Wealth Tax

8/8/2019 0 Wealth Tax

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WEALTH TAX ACT,1957WEALTH TAX ACT,1957

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Charge Of TaxCharge Of Tax



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Who Is An IndividualWho Is An Individual



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Who Is An IndividualWho Is An Individual

Anatural person or human being.Anatural person or human being.

Hindu deity or mutawajli of a wakf.Hindu deity or mutawajli of a wakf.

Group of individuals being trustees of aGroup of individuals being trustees of atrust.trust.

Holder of an impartible estate.Holder of an impartible estate.

Group of individuals like mapillai tarwards.Group of individuals like mapillai tarwards.



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Who Is Not An IndividualWho Is Not An Individual

A company.A company.



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A corporation established by state orA corporation established by state orcentral acts.central acts.

A coA co--operative society.operative society.



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Hindu Undivided FamilyHindu Undivided Family

Limited to Mitakshara families.Limited to Mitakshara families.

Dayabhaga school is not a HUF.Dayabhaga school is not a HUF.

If a hindu converts to christianity, heIf a hindu converts to christianity, hecannot be granted the status of HUF.cannot be granted the status of HUF.



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What Is A CompanyWhat Is A Company



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What Is A CompanyWhat Is A Company

Any Indian company.Any Indian company.

Any body corporate incorporated outsideAny body corporate incorporated outside

India.India. Any institution, AOP, BOI which is or wasAny institution, AOP, BOI which is or was

assessable or was assessed for anyassessable or was assessed for anyassessment year under Indian Income Taxassessment year under Indian Income TaxAct, 1922(now replaced by 1961).Act, 1922(now replaced by 1961).



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What Is An Asset [Section 2(ea)]What Is An Asset [Section 2(ea)]

Any building or land appurtenant theretoAny building or land appurtenant theretowhether used for residential or commercialwhether used for residential or commercialpurpose.purpose.



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Motor cars (other than used by assesseeMotor cars (other than used by assesseein business).in business).



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Jewellery, bullion & furniture, utensils orJewellery, bullion & furniture, utensils orany other article made wholly n partly ofany other article made wholly n partly ofgold, silver, platinum or any othergold, silver, platinum or any otherprecious metal.precious metal.



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Yachts, boats & aircraft.Yachts, boats & aircraft.



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Urban land.Urban land.



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Cash in hand in excess of Rs.50,000.Cash in hand in excess of Rs.50,000.



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Incidence Of Wealth TaxIncidence Of Wealth Tax

The liability of wealth tax depends uponThe liability of wealth tax depends uponthe citizenship & residential status.the citizenship & residential status.

For HUF, it depends totally uponFor HUF, it depends totally uponresidential status.residential status.



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Individual, Not A citizen Of IndiaIndividual, Not A citizen Of India

All assets in India except the value of assets inAll assets in India except the value of assets inIndia represented by any loan or debts.India represented by any loan or debts.

All debts in India except:All debts in India except:

a) The debt secured on any property or incurreda) The debt secured on any property or incurredin relation to any property on which wealth taxin relation to any property on which wealth taxis not payable.is not payable.b) Tax liability under direct tax if outstanding onb) Tax liability under direct tax if outstanding onvaluation date.valuation date.c) All assets and debts outside India are out ofc) All assets and debts outside India are out ofthe scope of wealth tax.the scope of wealth tax.



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An Individual, Citizen AndAn Individual, Citizen And

Resident In IndiaResident In India



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An Individual, Citizen AndAn Individual, Citizen And

Resident In IndiaResident In India All assets in India and assets locatedAll assets in India and assets located

outside India are taxable.outside India are taxable.

All debts in India and outside India are toAll debts in India and outside India are tobe taken in computing the net wealth.be taken in computing the net wealth.



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In Case of HUF, ResidentIn Case of HUF, Resident

All assets in India and assets outsideAll assets in India and assets outsideIndia.India.

All debts in India and outside India areAll debts in India and outside India aredeductible in computing net wealth.deductible in computing net wealth.



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HUF, RNOR & NRIHUF, RNOR & NRI



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HUF, RNOR & NRIHUF, RNOR & NRI

All assets in India except the assetsAll assets in India except the assetsrepresented by any loans and debts owingrepresented by any loans and debts owingto the assessee interest whereon isto the assessee interest whereon is

exempt from income tax act.exempt from income tax act. All debts in India except debts secured onAll debts in India except debts secured on

any property in which wealth tax is notany property in which wealth tax is notpayable.payable.

All assets and debts outside India are notAll assets and debts outside India are notchageable.chageable.



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Valuation Date, Section 2(q)Valuation Date, Section 2(q)

It is the last day of the previous year forIt is the last day of the previous year forincome tax assessment.income tax assessment.

It is a tax base of the levy of wealth tax.It is a tax base of the levy of wealth tax.

Where a person is not an assessee underWhere a person is not an assessee underIncome Tax Act, the valuation date will beIncome Tax Act, the valuation date will bealways on March 31always on March 31stst..



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Tax Rate, Section 3Tax Rate, Section 3

It will be charged in respect of net wealthIt will be charged in respect of net wealthon the corresponding valuation date ofon the corresponding valuation date ofevery individual and HUF at the rate ofevery individual and HUF at the rate of1% of the amount by which the net1% of the amount by which the netwealth exceeds Rs.15 lakhs.wealth exceeds Rs.15 lakhs.



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Deemed AssetsDeemed Assets

The individual must be the owner of theseThe individual must be the owner of theseassets.assets.

These assets must be transferred withoutThese assets must be transferred withoutadequate consideration.adequate consideration.

These assets must be held by theThese assets must be held by thetransferee on the valuation date.transferee on the valuation date.



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Asset transferred to spouse, Section 4(1)(a)(i).Asset transferred to spouse, Section 4(1)(a)(i).

Asset held by minor child, Section 4(1)(a)(ii).Asset held by minor child, Section 4(1)(a)(ii).

Asset transferred to a person or AOP, SectionAsset transferred to a person or AOP, Section4(1)(a)(iii).4(1)(a)(iii).

Asset transferred under revocable trust, SectionAsset transferred under revocable trust, Section4(1)(a)(iv)4(1)(a)(iv)

Asset transferred by an individual to sons wife or sonsAsset transferred by an individual to sons wife or sonsminor child including step child, Section 4(1)(a)(v)minor child including step child, Section 4(1)(a)(v)

Asset transferred by an individual for the benefit of sonsAsset transferred by an individual for the benefit of sonswife, Section 4(1)(a)(vi)wife, Section 4(1)(a)(vi)

Interest in the asset of the firm, Section 4(1)(b).Interest in the asset of the firm, Section 4(1)(b).



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Converted property, Section 4(ia).Converted property, Section 4(ia).

Transfer by means of entries in the book,Transfer by means of entries in the book,

section 4(5a)section 4(5a) Impartible assets section 4(6)Impartible assets section 4(6)

House from a coHouse from a co--operative housing societyoperative housing society

section 4(7)section 4(7)



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Assets exempt from wealth taxAssets exempt from wealth tax

Property held under a trustProperty held under a trust The interest of an assass in the coparcenaries propertyThe interest of an assass in the coparcenaries property

of an hufof an huf Any one building in the occupation of a former ruler of aAny one building in the occupation of a former ruler of a

princely state which has been declared by the centralprincely state which has been declared by the centralgovernment as his official residence immediately aftergovernment as his official residence immediately afterthe commencement of the constitution act 1971.the commencement of the constitution act 1971.

Jeweler in possession of a ruler which has beenJeweler in possession of a ruler which has beenrecognized before the commencement of the wealth taxrecognized before the commencement of the wealth taxact.act.

One house or part of the house belonging to anOne house or part of the house belonging to anindividual or an HUF or a plot of land comprising an areaindividual or an HUF or a plot of land comprising an areaof 500 sqmts or less.of 500 sqmts or less.



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Net WealthNet Wealth

According to sec 2(m), net wealth meansAccording to sec 2(m), net wealth meansthe amount by which the aggregate valuethe amount by which the aggregate valueof all assets wherever located belonging toof all assets wherever located belonging tothe assesse on the valuation date, is inthe assesse on the valuation date, is inexcess of the aggregate value of all theexcess of the aggregate value of all thedebts owed by the assessee on thedebts owed by the assessee on the

valuation date.valuation date.



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Following assets are not included:Following assets are not included:

1.1. Assets exempt under sec 5(1).Assets exempt under sec 5(1).

2.2. Asset lost, destroyed or stolen on orAsset lost, destroyed or stolen on orbefore valuation date.before valuation date.



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What Is Debt?What Is Debt?



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What Is Debt?What Is Debt?

Debts owed are interpretable to mean theDebts owed are interpretable to mean theliability to pay a certain amount of money eitherliability to pay a certain amount of money eitherin present or in future.in present or in future.

It is an obligation to pay a liquidated or certainIt is an obligation to pay a liquidated or certainsum of money.sum of money.

It is not the point of time of payment thatIt is not the point of time of payment thatdetermines whether the claim or demand is adetermines whether the claim or demand is a

debt.debt. There must be an actual debt owing on theThere must be an actual debt owing on the

valuation date.valuation date.



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Return Of WealthReturn Of Wealth

Sec 14 deals with the filing of return of wealth.Sec 14 deals with the filing of return of wealth.

It is statutorily obligatory for every person to fileIt is statutorily obligatory for every person to filethe return if his net wealth exceeds maximumthe return if his net wealth exceeds maximum

amount which is chargeable to wealth tax.amount which is chargeable to wealth tax.

He can file a belated or revised return at anyHe can file a belated or revised return at anytime before the expiry of one year from the endtime before the expiry of one year from the endof the relevant assessment year or before theof the relevant assessment year or before thecompletion of assessment, whichever is earlier.completion of assessment, whichever is earlier.



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Wealth Escaping Assessment,Wealth Escaping Assessment,

Section 17Section 17 If the assessing officer has reason to believe that the netIf the assessing officer has reason to believe that the net

wealth of any person has escaped assessment for anywealth of any person has escaped assessment for anyassessment year, he may be subjected to the provisionsassessment year, he may be subjected to the provisionsof the act serve on such person a notice requiring him toof the act serve on such person a notice requiring him to

furnish within such period as specified in the notice, afurnish within such period as specified in the notice, areturn in the prescribed form and prescribed mannerreturn in the prescribed form and prescribed mannersetting forth the net wealth of such person is assessablesetting forth the net wealth of such person is assessableas on the valuation date mentioned in the notice.as on the valuation date mentioned in the notice.

No action shall be taken under this sec after the expiryNo action shall be taken under this sec after the expiry

of 4 years from the end of the relevant assessment year.of 4 years from the end of the relevant assessment year.



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Time Limit For Completion OfTime Limit For Completion Of

Assessment Or Reassessment,Assessment Or Reassessment,

Sec 17ASec 17A No order of assessmentshall be made atNo order of assessment shall be made at

any time after the expiry of 2 years fromany time after the expiry of 2 years fromthe end of the assessment year in whichthe end of the assessment year in which

the net wealth was first assessable.the net wealth was first assessable. No order of assessment or reassessmentNo order of assessment or reassessment

shall be made under sec 17 after theshall be made under sec 17 after theexpiry of one year from the end of theexpiry of one year from the end of thefinancial year in which the notice underfinancial year in which the notice undersec 17(1) was served.sec 17(1) was served.



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ConclusionConclusion



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ConclusionConclusion

The revenue from wealth tax is negligible asThe revenue from wealth tax is negligible ascompared to the revenue from income tax. Thecompared to the revenue from income tax. Theexpenses incurred in collectin the wealth tax isexpenses incurred in collectin the wealth tax is

very high compared to the revenue earned.very high compared to the revenue earned.An important point to note is that the wealth tax isAn important point to note is that the wealth tax is

unable to keep a check on the affluent people ofunable to keep a check on the affluent people ofthe society as it fails to bridge the gap betweenthe society as it fails to bridge the gap between

the rich and the poor, as the tax rate isthe rich and the poor, as the tax rate isextremely low.extremely low.



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AcknowledgementAcknowledgement

We would like to thank Mr. AugustineWe would like to thank Mr. AugustineAmaldas for giving us this opportunityAmaldas for giving us this opportunitywhich has enriched our minds.which has enriched our minds.


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