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Wealth tax

CA ANUPAMA (CMA, CA ) (149 Points)

19 September 2011

Wealth Tax is on Net Wealth. And my doubt is that if this year the value of the property is 10,00,000/- and the same might be increased to 15,00,000 for the next year. So what is the Net Wealth as per Wealth Tax Act, either 15,00,000/- or 10,00,000? (That person is a regular wealth tax assessee and he paid this year wealth tax amount on 10,00,000) Current year he already paid tax on 10,00,000, so it is necessary to pay the total or incremental cost?

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7 Replies

CA RICHA BADALIA (CA,CS) (1682 Points)
Replied 19 September 2011

Wealth Tax is charged for every assessment year in respect of Net Wealth on the corresponding Valuation date.There is no such concept of levy of WT on incremental part only.It would be charged on Total net asset every year on 31.03.20XX.Therefore in the next year WT would be charged on total net asset ie Rs. 15,00,000 in your case.

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CA ANUPAMA (CMA, CA ) (149 Points)
Replied 19 September 2011

Can u give me the supporting evidence for that?

ashish gupta ( student) (1922 Points)
Replied 19 September 2011

M sorry but your quey is not clear to me.

Richa is right in what she is saying and there is no need for any supporting. Just read the basic chargeability section 3 of Wealth Tax Act.

Rehbar Siamwala (Sr. Executive Taxation) (112 Points)
Replied 19 September 2011

The Limit for Wealth Tax has been increased to Rs. 30 Lacs, Fyi...

I agree with Richas & Ashish, Refer section 3 of wealth Tax Act.

* Krishna * (CA Student) (6149 Points)
Replied 19 September 2011

The present threshold limit of wealth tax is Rs. 30 lakhs. If Net Wealth exceeds this Rs. 30 lakh limit, then tax is to be paid @ 1% on the exceeded limit. There is no sucharge and cess on this. The term Assets is defined in Sec.2(ea) of Wealth Tax Act. To say briefly, the term Assets includes urban land, buildings, cars, yachts, boats, aircrafts, jewellery, bullion and articles made of gold/silver/platinum.

Broadly, Net Wealth can be arrived as below:

Assets as per Sec.2(ea) (minus) All debts owed by the assessee as on the valuation date (31st March) on above assets (minus) Exempted assets u/s 5 (plus) Deemed assets u/s 4.

The aforesaid threshold limit of Rs. 30 lakhs is raised to Rs. 1 crore under new DTC, which means net wealth exceeding 1 crore limit will only be taxable at 1% rate without any cess. However, some more assets also brought into the ambit of the definition Assets. As said by Richa, there is no concept of incremental value. One should arrive the net wealth by following above procedure.

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* Krishna * (CA Student) (6149 Points)
Replied 19 September 2011

One more thing to note here is tax liability will be based on wealth owned as on Valuation Date i.e. 31st March, which means, if any assets are sold during the year, those will be totally excluded from the wealth tax calculation.