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Wealth tax is imposed on the richer section of the society. The intention of doing so is to bring parity amongst the taxpayers. However, wealth tax was abolished in the budget of 2015 (effective FY 2015-16) as the cost incurred for recovering taxes was more than the benefit is derived. Abolishing the wealth tax also simplified the tax structure. As an alternative to the wealth tax, the finance minister hiked the surcharge from 2% to 12% for the super rich section. Individuals with an income of above Rs.1 crore and companies with an income of over Rs.10 crore fall under the ambit of the super-rich segment.
Wealth tax is applicable to individuals, HUFs, and companies. The deciding factor for applicability of wealth tax is the residential status. The thumb rule is the resident Indians are subject to wealth tax on their global assets. However, NRI’s fall under the ambit of wealth tax for the assets held in India.
If the total net wealth of an individual, HUF or company exceeds Rs. 30 lakhs, on the valuation date, tax @1% will be leviable on the amount in excess of Rs. 30 lakhs. Every person whose net wealth exceeds such limit shall furnish a return of net wealth. The due date is same as that of Income tax return.
|Value of Assets belonging to the assessee on the valuation date||XXX|
|Add: Deemed wealth||XXX|
|Less: Exempt Assets||XXX|
|Less: Debts incurred in relation to the assets||XXX|
a. House allotted by accompanying/ employer to be used exclusively for residential purposes, where the gross total salary of the assessee is less than Rs.10 lakhs
b. House which forms part of Stock in trade
c. House occupied by the assessee for business/ professional purpose
d. Residential property let out for minimum of 300 days in the previous year
e. Property in the nature of commercial establishment or complex
2. Motorcars, other than those used for running them on hire or those held as stock in trade
3. Jewellery, bullion, furniture, utensils or other articles made fully/ partly of gold, silver, platinum or such precious metals
4. Yachts, boats and aircrafts other than those used for commercial purpose
5. Urban land situated in the Specified area, other than:
a. Those classified as agricultural land and used for such purpose
b. Those in which building construction is not permissible
c. Land occupied by building, which was constructed with the approval of the appropriate authority
d. Unused land held by assessee for industrial purposes for a period of 2 years from the date of acquisition.
e. Land held by the assessee as stock in trade for over 10 years from the date of acquisition
6. Cash in hand in excess of Rs. 50,000