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RELAT ED KEYWORDS: Wealth Tax | Hindu Undivided Family | Financial Assets

Financial assets may be part of wealth Tweet tax

TN N | A pr 2, 2014, 12.54A M IST

NEW DELHI: The finance ministry has proposed to expand the ambit of wealth tax to include financial assets but has significantly raised the threshold for the levy. The draft Direct Taxes Code (DTC) has, however, proposed to slash the rate from 1% to 0.25%. The Code has suggested that individuals and Hindu Undivided Family (HUF) with net wealth of up to Rs 50 crore will be exempted, while those beyond the limit will face the 0.25% levy on the incremental amount. Private discretionary trusts will, however, be subjected to the tax on the entire "net wealth". The move to include financial assets within the scope of wealth tax is meant to make the net wider as high net worth individuals go beyond real estate and bullion and increasingly store their earnings in financial instruments. "To keep the base wide, the revised Code captures all assets for wealth-tax, whether physical or financial, thereby removing the distinction between physical and financial assets, which discriminated against those taxpayers, who are conservative and put their money in physical assets," the finance ministry said in a statement.

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Net wealth, the draft document said, will exclude one house or part of a house, a vacant plot of up to 500 square metres of an individual or an HUF. Similarly, farm land and business trading assets, other than land, will not be included.

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