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Wealth Tax and Wealth Tax Return

Wealth Tax and Wealth Tax Return

Every Individual, Hindu Undivided Family and Company whose net wealth exceeds the maximum amount which is not chargeable to wealth tax in any previous year ending of 31st March is liable to file the wealth tax return. The maximum limit of net wealth not chargeable to tax under the provisions of the Wealth tax Act, 1957 is Rs. 30 lakhs at present.

Assets liable to wealth tax

  • Buildings or land other than one house property or a plot of land having area of 500 square meters or less.
  • Motor Cars, Yachts, boats and aircrafts
  • Jewellery
  • Bullion, furniture, utensils or any other, article made wholly or partly of gold, silver, platinum or any other previous metal
  • Urban land
  • Cash on hand in excess of Rs. 50,000/-.

Note : Wealth tax is not levied on productive assets, hence investments in shares, debentures, UTI, mutual funds, etc are exempt from it.

Net Wealth

Net wealth is the aggregate value, computed under the provisions of the W.T. 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.

Deemed Ownership of Assets

A person is treated deemed owner in respect of assets transferred by him/her (without adequate consideration) to:

  • his/her HUF or
  • his/her spouse or
  • his/her son’s wife or
  • to a person for his/her benefit or for the benefit of his/her spouse or for the benefit his/her son’s wife.

Assets belonging to minor child

  • Assets belonging to a minor child are clubbed along with the net wealth of his/her parent.
  • No clubbing is done in respect of assets belonging to minor child suffering from any disability specified under section 80U of the Income Tax Act.
  • Further, clubbing provisions do not apply in respect of any asset acquired by the minor child out of income arising to the child by application of his/her skill, talent or specialized knowledge and experience etc.

Wealth Tax Rate

Wealth Tax is charged @ 1% of the amount by which the net wealth exceeds Rs. 30 Lakhs.

Filing of Wealth Tax Return

The Wealth Tax return for Individuals, Hindu Undivided Families and Companies is to be filed in Form BA.

Value of assets for an assessment year is to be declared as on the relevant Valuation Date i.e. 31st March of each year. Thus, for the assessment year 2013-14, the valuation date will be 31.3.2013.

The due dates for filing of Wealth Tax return are the same as the due dates for filing of Income Tax return (i.e. if the assessee is liable to audit, the due date will be 30th September and in other cases the due date will be 31st July.

Value of an asset, other than cash, is to be determined on the basis of the rules of Schedule III. The details of calculation of the value of each asset under the relevant rule of this schedule should be attached with the return. Also, Wherever any rule of this schedule prescribes that a particular document in support of the valuation is to be attached with the return, the same must be attached.

The assessee must sign all attached documents.

Wealth Tax and Wealth Tax Return

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