All you
conscientious taxpayers who want to honestly pay your taxes and get a good
night’s sleep.
Did you know
that your duty as a taxpayer does not end with paying income tax?
While
income tax is what you pay on the taxable income you have earned during the
year,
you may
also be liable to pay an additional tax on the wealth you have accumulated over
the years. Called wealth tax, here are some quick facts on it.
^^ What is Wealth Tax?
It is a
direct tax governed by the Wealth Tax Act,1957 and imposed on the basis of
ownership of certain assets, payable even though the assets may not earn an
income. Such as income tax, it is an annual tax.
^^ When am I liable for wealth tax?
An
individual is liable for wealth tax only if his / her net taxable wealth, that
is, the aggregate value of all taxable assets (subject to available exemptions)
on the valuation date (March 31) minus the aggregate value of all debts owed in
relation to such taxable assets, exceeds Rs. 30 lakhs.
^^ What is the scope of taxable wealth?
The scope
of taxable wealth depends on the residential status (according to the
Income-Tax Act) and nationality of the taxpayer. If the taxpayer is a citizen
and an ordinary resident of India then all taxable assets in and outside India
are taxable (subject to available exemptions). However, if the taxpayer is a
citizen of India who is non-resident or not ordinarily resident in India or a
citizen of another country (whether he is resident in India or not) then the
net wealth would comprise only his Indian taxable assets (subject to available
exemptions).
^^ Which
assets are considered taxable?
The
following assets owned by an individual are subject to wealth tax:
• Guesthouse, farmhouse, residential
house
• Motorcar
• Jewellery, bullion, furniture, utensils
and articles made of precious metal
• Aircraft, yachts and boats
• Urban land
• Cash in hand exceeding Rs 50,000.
Exemption
is available for certain assets subject to specified conditions. For example,
certain assets used as stock-in-trade of a business, residential property which
has been let out for at least 300 days, one house, part of a house or a plot of
land belonging to an individual are exempt from wealth tax Apart from assets owned
by you, assets held by your minor children or assets transferred by you to your
spouse for inadequate consideration are also deemed to be your assets.
^^ What is
the rate?
Wealth
tax is payable at 1 % of the aggregate value of taxable assets owned by you exceeding
Rs 30 lakh in value, as on March 31 of the year.
^^ When and
how should the tax be paid?
Wealth
tax should be paid as self-assessment tax using the prescribed challan (ITNS
282) before filing your return of wealth.
^^ Should I
file a wealth tax return?
A return
of wealth should be filed by an individual taxpayer in the prescribed form
(Form BA) by July 31 following the valuation date, if the net taxable wealth
exceeds Rs 30 lakh. There is currently no facility for filing wealth tax return
electronically. Hence, it should be filed in paper form at the office of your
jurisdictional tax officer.
^^ Is wealth
tax return scrutinised?
The tax
officer has the authority to scrutinise the return filed by you. He/she can
serve a notice for scrutiny anytime within one year from the end of the month
in which the return was filed.
^^ Can I
file an earlier year’s return now?
If you
have not filed your wealth tax return for a particular assessment year, you can
file a belated return within two years from the relevant valuation date. Hence,
you can still file your wealth tax return for March 31, 2011 and 2012.
^^ What are
the consequences of late filing, or not filing wealth tax return?
Interest
for late filing is payable at 1 % per month of the tax due. If you are liable
to pay and file a wealth tax return and fail to do so, the tax officer may
initiate proceedings for recovery of wealth tax and interest due. In addition,
he/she may also levy a penalty that can range anywhere between the wealth tax
due and five times the amount.
Om
Spectrum Financial Consultants (P) Ltd
Phone:
044-2489 1133, 2815 7070
Mobile:
98410 25125
USA: 1
248 522 6626
Tejas,
1st Floor, New No. 108, Fourth Avenue,
Ashok
Nagar, Chennai - 600 083
Tamil
Nadu, India.
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