Q. What is Wealth Tax?
A. Wealth tax is a tax which is charged on the “Net Wealth”.
Q. What is “Net Wealth”?
A. Net Wealth is the aggregate value, computed under the provisions of the Wealth Tax Act, 1957, of all assets (including deemed assets), belonging to the assessee on the valuation date, MINUS the aggregate value of all debts owed by the assessee on the valuation date which have been taken in relation to the assets attracting wealth tax.
Q. How assets should be valued?
A. All assets other than cash shall be valued as per the provision laid down in Schedule III of the Wealth Tax Act.
Q. When wealth tax shall be charged?
A. Wealth tax shall be charged for every assessment year in respect of the Net Wealth as on the corresponding valuation date. For example, for assessment year 2013-14, the valuation date is March 31, 2013. Due date for filing of Wealth Tax Return will correspond to the date of Income Tax Return of the concerned assesse.
Q. Who is liable to pay wealth tax?
A. Every Individual, Hindu Undivided Family and Company is liable to pay wealth tax.
Q. Who is not liable to wealth tax on net wealth?
A. Following are not liable to pay net wealth on net wealth:
- Company registered u/s 25 of the Companies Act, 1956
- Co-operative Society
- Social Club
- Political Party
- Mutual Fund specified in section 10(23D) of the Income Tax Act, 1961.
- Reserve Bank of India
Q. What is rate of wealth tax?
A. Wealth tax shall be charged at the rate of 1%.
Q. What is the exemption limit of net wealth chargeable to wealth tax?
A. Wealth Tax is charged if Net Wealth as on valuation date exceeds Rs 30 lakh. Hence, Net Wealth upto Rs 30 Lac is exempt from wealth tax.
Q. Which assets are chargeable to wealth tax under Wealth Tax Act?
A. Following assets are chargeable to wealth tax:
- Buildings or land appurtenant thereto (hereinafter referred to as “house”)
- Motor Cars
- Yachts, boats and aircrafts
- Jewellery, bullion, etc.
- Urban land
- Cash in hand
Q. Which assets are not chargeable to wealth tax under Wealth Tax Act?
A. Wealth tax is not levied on productive assets; hence investments in shares, mutual funds, bank balance etc are not chargeable to wealth tax.
Q. Is there any exemption of self-occupied house under Wealth Tax Act?
A. Exemption is available for one house (or part of house) or a plot of land upto 500 Sq Meter.
Q. Under which circumstances assets and debts located outside India are not to be included in the wealth of the assessee?
A. Assets located outside India and debts incurred in relation to such assets are not to be included in the net wealth of:
- An Individual who is Non-resident (NR) or Resident but Not Ordinarily resident (RNOR) or not a citizen of India (Foreign Citizen).
- HUF which is Non-resident or resident but not ordinarily resident
- Company which is Non-resident
Q. Is there any benefit for an individual being a citizen of India or a person of Indian Origin, who is residing in a foreign country and returning to India (i.e. benefits for Returning NRIs)?
A. As per Wealth Tax Act, if an NRI returns back to India, then he will be eligible for exemption from Wealth Tax in relation to assets purchased out of money brought into India by that NRI. Exemption will be available for 7 years.
Q. Whether Trust is liable to pay wealth tax?
A. Yes. Trust is assessable as an Individual and is therefore liable to pay wealth tax.