Wealth Tax In India

Wealth tax came into existence on 1st April 1957. Wealth tax is derived from the property
owned by the proprietor. The proprietor needs to pay tax every year on property owned by
them. The residential property that does not yield any income to its owner is also subjected
to wealth tax.Wealth tax is termed as most significant direct tax.
As per the wealth tax act, wealth tax is applicable to the following:

• An individual person
• A group of people who own a property
• A company or organization
• A Hindu undivided family (HUF)
• Person belongs to 1-by -6 categories
• A representative or heir of a dead person
• Non corporative tax payer

The chargeability of a wealth tax in India for its residence or foreign citizens are different.
Any person who is resident of India has to pay wealth tax under his/her name. If owner of
property is deceased, heir of the property is bound to pay the wealth tax of the property. If a
person owns a citizenship of a foreign country and he/she acquires a property in India as
well as in foreign country. Under those circumstances the property owned by the owner in
India is taxable where as property located outside India is exempted from the list. All assets
and debts outside India are out of the scope of Wealth Tax Act.

The following assets are subjected to wealth tax:

1. Guesthouse, farm-house, commercial complex, shopping mall and residential

complex are subjected to the wealth tax.
2. Valuable items like jewelry and any items made up of precious metals like gold,
silver, platinum or any other precious metals.
3. Aircrafts, yachts, boats that is used for non-commercial purpose
4. Cash in hand that is more than 50,000, for individual and Hindu undivided families.
5. Any cash that is not recorded on the account log book is subjected to the wealth tax.
6. Motor car that is owned by an individual.
7. Any urban land situated in the jurisdiction where there is a total population of ten
thousand as per last census is subjected to the wealth tax.
Assets that are exempted from the list of wealth tax are:

• Air craft or boat used for business purpose provided by the company.
• Furniture, apparels and electronic items that is for personal use.
• Accommodation provided by the company or organization to its employee. The
annual salary of the employee is less than Rs 500,000.
• Any land donated for the religious purpose or to charitable trust is not subjected
to wealth tax.

There are few assets that are termed as deemed assets:

1. Assets transferred from one spouse to another

2. Assets held by a minor child. As per the income tax act such wealth is taxed
individually and will not be termed as the net asset of the main
owner/parents/guardian.
3. Assets transferred to the son’s wife.
4. Assets transfer to the grandchildren.
5. Assets transferred to a person or Association of Persons for the benefit of son's wife.

There are few exceptional assets that are exempted by the government:

1. The belongings such as residential building and palace belongs to rulers are
considered as national heritage and wealth tax is exempted for it.
2. Former Ruler's jewellery is also excluded from the wealth tax. As per the
government is termed as national asset.
3. Assets belonging to the Indian repatriate for 7 years on fulfillment of the conditions
prescribed.

The valuation of net asset is considered as total asset other than the cash that is valued on
valuation date determined in the manner laid down in Section 7(2) and in Schedule III to
the Wealth Tax Act.

How to file return of wealth tax?

To file a wealth tax is same as like filing an income tax. A person is required to file a return
of wealth in form A. If the net value of the asset comes under the bracket of wealth tax than
person is bound to file the wealth tax. This should be noted that before filing a wealth tax all
the essential documents should be attached with the form A.