What is Wealth Tax?
Interestingly, Wealth Tax is better known as ‘Taxing One’s Riches’. A popular direct tax which is levied on idle assets that do not generate any kind of income which includes jewellery, real estate like urban land, owned but unrented house etc. Most of us would presume that it is levied on any asset that is owned by us and can be avoided by changing the ownership status to spouse or children. But, any transfer of asset to without any adequate or appropriate consideration, shall come under the purview of your net wealth for wealth taxation purposes.
Assets taxable under Wealth Tax are:
- Jewellery, bullion and ornaments made of precious metals, precious or semi-precious stones;
- Furniture or utensils having precious/semi precious stones in any form;
- Second owned property which is not rented for more than 300 days in a year;
- Farm house within the ambit of 25 kms from local municipality limits
- Urban land having area exceeding 500 Sq. Mts.
- Commercial establishment or complexes.
- Owned car, boat, yacht or any aircraft
- Cash exceeding Rs.50,000/-
Who has to pay Wealth Tax?
Wealth tax is applicable to person who fulfills following eligibility criterion:-
- He/she must be an Indian National.
- He/she must be a resident of India.
What are the wealth tax laws relating to Non Resident Indians?
If you are a non resident Indian and wish to purchase/acquire any asset in India from the money brought from ones resident country then it is exempted from wealth tax, provided the purchase date of that asset is within a year preceding the date of your return or any other time thereafter. Interestingly, this exemption can be availed by an NRI for 7 successive years from the date of return to India.
What is the Wealth tax rate?
Wealth tax is 1% of net value of taxable wealth if it is over Rs.30 lakhs as on 31st March of the tax year.
A glimpse at the current scenario:-
The Finance Minister of India has completely abolished the wealth tax in his Budget-2015 and will make it applicable from financial year 2015-16 onwards. The rich and wealthy have to bear the compensation by paying additional surcharge on their high income earning. Individuals who have yearly earning of Rs.1 Crores and above have to pay increased surcharge of 12%. On the other hand, firms whose annual income is Rs.10 Crores and more also have to pay this increased surcharge of 12%.
Wealth Tax Return had to be mandatory filed online. Let’s learn the procedure.
- Download Form BB (Return of Net Wealth).
- It is applicable on all type of persons including individuals and HUFs from Assessment year 2015-16.
- It requires digital signature so the authorized signatory must apply for it before the filing date.
- The form shall be accompanied with statement of computation of tax payable, valuation report of registered valuer and lastly, proof of tax/interest deposit as applicable.
If you are looking for consultant to assist you in filing, MyAdvo.in can help you in finding a tax consultant in your location.
What will happen if tax is not paid or e-return is not filed with the respective authority?
If return is not filed within one year from the end of assessment year, it will attract penalty of 1% per month for delay till it is finally submitted.
If tax is not paid then penalty upto 100% of tax will be charged; while it is up to 500% on hiding of wealth tax.
Wealth Tax will be completely removed from financial year 2015-16 onwards and thereafter will be a great relief from the heads of middle income tax payers. The wrath of abolishment will be borne by high income group persons by way of increased surcharge.