Wealth Tax is covered under wealth tax act 1957 which states that tax shall be levied on net wealth of the tax payer.
PROVISION: – Wealth tax is not levied on every assesse but only following assesses are covered under wealth tax act 1957: –
- An Individual,
- A Hindu Undivided Family (HUF),
- A company
Only the above persons are liable to pay wealth tax. Now question arises what about other assesses like partnership firm, association of persons, etc. A partnership firm is not liable to pay wealth tax, but the value of the assets held by the firm is to be ascertained and this value will be distributed amongst the partners of the firm and will be charged to tax in the hands of the partners in the form of “Interest in partnership firm”. However, where a minor is admitted to the benefits of partnership in a firm, the value of the interest of such minor in the firm shall be included in the net wealth of the parent of the minor. Similarly, an association of persons is not liable to wealth tax, but the assets of the association of person are charged to tax in the hands of its members in the form of “Interest in partnership firm”.
Following entities are not liable to pay wealth tax: –
- A company registered u/s 8 of companies act 2013
- A co-operative society
- A social club
- A political party
- A mutual fund specified u/s 10(23D) of income tax act 1961
- Reserve Bank of India
Wealth tax is levied on the value of assets owned by the taxpayer on the valuation date, i.e., 31st March of the relevant year. Value of any asset liable to wealth-tax (other than cash) is to be determined in the manner prescribed in the Valuation Rules (i.e., rules given in Schedule III of Wealth-tax Act).
Every person whose net wealth on the valuation date exceeds Rs. 30,00,000/- shall file his/her return of net wealth. Wealth-tax is levied at 1% on the net wealth in excess of Rs. 30,00,000.
Due dates for filing wealth tax return shall be as follows: –
- For tax payers liable to audit and companies, due date will be 30th September
- For others due date will be 31st July
Interest shall be liable @ 1% for month or part of month for delay in filing of return of net wealth.
A belated return or revised return can be filed within a period of one year from the end of the assessment year or before completion of assessment, whichever is earlier.
Penalty in case of concealment of wealth can be between 100% to 500% of tax sought to be avoided.
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