Updated on: Mar 11th, 2024
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9 min read
Wealth tax is imposed on the richer section of the society. The intention of doing so is to bring parity among the taxpayers. However, the 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 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 the applicability of wealth tax is the residential status. The thumb rule is that 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 the 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 |
Total | XXX |
1. Any building or land appurtenant, whether used for residential/ other purposes, but doesn’t include:
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:
6. Cash in hand in excess of Rs. 50,000
Deemed Assets: These are assets, though not legally belonging to the assessee, are clubbed as his assets while computing his net wealth
Wealth tax was abolished in 2015 with a 12% surcharge for the super-rich, applicable to individuals, HUFs, and companies. Net wealth exceeding Rs. 30 lakhs is taxed @1%. Assets, deemed assets, and exempted assets are considered in wealth tax computations.