22 May 2012
A proprietor having three different businesses.As on 31.3.2008 The cash in hand of all the three businessess put together is Rs.50.00 laks for the Asst year 2008-09.He has overdraft account also in one of the businesses which shows an outstanding balance of Rs.36.00Lakhs.All other assets are exempted assets under WT Act.CAN AO take the cash in hand which is morethan 15.00 laks as taxable asset? Can we plead for deduction of OD Liabilty from the Cash balance? or the cash -in-hand in the running business be claimed as exempted asset? His business warrants to maintain huge cash balance.Kindly advise.( Act says cashin hand in excess of 50,000 is taxable asset)
22 May 2012
Dear Friend, The Exemption limit is increased upto Rs. 30.00 Lacs from the previous year. In your case the cash balances above Rs. 50,000/- Lacs will be considered , while calculating Wealth Tax.
for the A.Y 2008-09, tax shall be paid on net wealth of more than Rs 15 lakhs. Cash balance can not be adjusted with Bank OD. You will have to pay WT on Rs. 50 lakhs - Rs. 15 lakhs i.e on Rs. 35 lakhs.
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