Wealth Tax – Do you really need to pay?

Are you aware….??? Apart from your income tax, you may also be required to file some other taxes. Paying income tax has become very common to all of us and we do it regularly. But how many of you are aware of wealth Tax…??? In our last article we have explained the method of income tax calculation with facts and figures. Click here to read article on How to Calculate Income tax…???

Wealth Tax Act is an important type of direct tax; it is levied on the benefits derived from property ownership. It is introduced in 1st April 1957 for the first time in India. The tax is to be paid year after year on your wealth (property) on its market value, no matter whether the property yields any income or not. Wealth refers to the value of prescribed assets of an individual as reduced by debts owed in respect of assets.
 
Wealth = Prescribed assets - debts owed in respect of assets
 
Who Pays Wealth Tax


The person paying the Wealth Tax under the clauses of the Wealth - Tax Act, 1957 is called as Assessee. Following are the categories an assessee can belong to.

• A company
• A Hindu Undivided Family
• An Association of Persons or a Body of Individuals
• Non-corporative taxpayers
• Persons belonging in the 1-by-6 categories
• Legal representative, executor or administrator of a dead person
• An agent of a non-resident .

Wealth tax is levied on:-


While the definition of assets covered under wealth tax is extremely wide, fortunately a description has been provided for assets that fall within the purview of wealth-tax. Broadly, the following assets are considered as part of the taxable wealth of an individual:

• A house, with the first one being exempt
• Vacant plots of land (other than agricultural land)
• Silver, gold, precious stones, jewellery, etc
• Motor car (other than for business of hire) and
• Cash in excess of Rs 50,000.
• Yachts, boats and aircraft

An important point to note is that the value for the purpose of wealth-tax would be the value of the assets as on the last day of the respective previous year (i.e., March 31).

Wealth tax Exemptions

Wealth tax is not levied on all your productive assets, following assets are exempted from wealth Tax.

• Shares of companies
• Bank and company deposits
• Bonds
• Debentures
• Mutual fund units
• National savings certificates, etc.

Sources:http://www.indianmoney.com/article-display.php?cat_id=1&sub_id=110&aid=887&acat=&page_id=3&ahead=Wealth%20Tax%20%96%20Do%20you%20really%20need%20to%20pay?