WEALTH TAX ACT,1957

Charge Of Tax

Charge Of Tax
It is charged for every assessment
year commencing from 1/4/1957 in
respect of net worth.
Wealth tax is charged on the net
wealth of the assessee.

Who Is An Individual

Who Is An Individual
A natural person or human being.
Hindu deity.
Group of individuals being trustees of
a trust.
Holder of an impartible estate.
Group of individuals.

Who Is Not An
Individual
A company.

 A corporation established by state or

central acts.
A co-operative society.

Hindu Undivided Family

Limited to Mitakshara families.
Dayabhaga school is not a HUF.
If a hindu converts to christianity,
he cannot be granted the status of
HUF.

What Is A Company

What Is A Company
Any Indian company.
Any body corporate incorporated
outside India.
Any institution, AOP, BOI which is or
was assessable or was assessed for any
assessment year under Indian Income
Tax Act, 1922(now replaced by 1961).

What Is An Asset
[Section 2(ea)]
Any building or land appurtenant
thereto whether used for residential
or commercial purpose.

 Motor cars (other than used by

assessees in business).

Jewelry,
Bullion
Furniture
Utensils or any other article made
wholly and partly of gold, silver,
platinum or any other precious metal.

 Yachts, boats & aircraft. (Note :Helicopter is not covered under

aircraft)

 Urban land.

 Cash in hand in excess of Rs.50,000.

Incidence Of Wealth
Tax
The liability of wealth tax depends
upon the citizenship & residential
status.
For HUF, it depends totally upon
residential status.

Individual, Not A citizen

Of India

Individual, Not A citizen

Of India
All assets in India except the value of assets in India
represented by any loan or debts.
a)
All debts in India except:
The debt secured on any property or incurred in
relation to any property on which wealth tax is not
payable.
b) Tax
liability under direct tax if outstanding on valuation
date.
c) All assets
and debts outside India are out of the scope of
wealth tax.

An Individual, Citizen
And Resident In India

An Individual, Citizen
And Resident In India
All assets in India and assets located
outside India are taxable.
All debts in India and outside India
are to be taken in computing the net
wealth.

In Case of HUF,
Resident
All assets in India and assets outside
India.
All debts in India and outside India
are deductible in computing net
wealth.

HUF, RNOR & NRI

HUF, RNOR & NRI

All assets in India except the assets
represented by any loans and debts owing to
the assessee interest whereon is exempt
from income tax act.
All debts in India except debts secured on
any property in which wealth tax is not
payable.
All assets and debts outside India are not
chageable.

Valuation Date, Section

2(q)
It is the last day of the previous year
for income tax assessment.
It is a tax base of the levy of wealth
tax.
Where a person is not an assessee
under Income Tax Act, the valuation
date will be always on March 31st.

Tax Rate, Section 3

It will be charged in respect of net
wealth on the corresponding valuation
date of every individual and HUF at
the rate of 1% of the amount by
which the net wealth exceeds Rs.30
lakhs.

Deemed Assets
The individual must be the owner of
these assets.
These assets must be transferred
without adequate consideration.
These assets must be held by the
transferee on the valuation date.

Deemed Assets

Asset transferred to spouse, Section 4(1)(a)(i).

Asset held by minor child, Section 4(1)(a)(ii).
Asset transferred to a person or AOP, Section 4(1)(a)(iii).
Asset transferred under revocable trust, Section 4(1)(a)(iv)
Asset transferred by an individual to sons wife or sons minor
child including step child, Section 4(1)(a)(v)
Asset transferred by an individual for the benefit of sons wife,
Section 4(1)(a)(vi)
Interest in the asset of the firm, Section 4(1)(b).

 Converted property, Section 4(ia).

Transfer by means of entries in the
book, section 4(5a)
Impartible assets section 4(6)
House from a co-operative housing
society section 4(7)

Assets exempt from

wealth tax
Property held under a trust
The interest of an assass in the coparcenaries or member
of an HUF
Any one hose of a former ruler of a princely state which has
been declared by the central government as his official
residence immediately after the commencement of the
constitution act 1971.
Jewelry in possession of a ruler which has been recognized
before the commencement of the wealth tax act.
One house or part of the house belonging to an individual or
an HUF or a plot of land comprising an area of 500 sqmts or
less.

Net Wealth
According to sec 2(m), net wealth
means the amount by which the
aggregate value of all assets
wherever located belonging to the
assesse on the valuation date, is in
excess of the aggregate value of all
the debts owed by the assessee on
the valuation date.

 Following assets are not included:

1. Assets exempt under sec 5(1).
2. Asset lost, destroyed or stolen on
or before valuation date.

What Is Debt?

What Is Debt?
Debts owed are interpretable to mean the liability
to pay a certain amount of money either in present
or in future.
It is an obligation to pay a liquidated or certain
sum of money.
It is not the point of time of payment that
determines whether the claim or demand is a debt.
There must be an actual debt owing on the
valuation date.

Return Of Wealth
Sec 14 deals with the filing of return of wealth.
It is statutorily obligatory for every person to
file the return if his net wealth exceeds maximum
amount which is chargeable to wealth tax.
He can file a belated or revised return at any
time before the expiry of one year from the end
of the relevant assessment year or before the
completion of assessment, whichever is earlier.

Wealth Escaping
Assessment, Section 17
If the assessing officer has reason to believe that the
net wealth of any person has escaped assessment for any
assessment year, he may be subjected to the provisions
of the act serve on such person a notice requiring him to
furnish within such period as specified in the notice, a
return in the prescribed form and prescribed manner
setting forth the net wealth of such person is assessable
as on the valuation date mentioned in the notice.
No action shall be taken under this sec after the expiry
of 4 years from the end of the relevant assessment
year.

Time Limit For Completion

Of Assessment Or
Reassessment, Sec 17A
No order of assessment shall be made at
any time after the expiry of 2 years from
the end of the assessment year in which the
net wealth was first assessable.
No order of assessment or reassessment
shall be made under sec 17 after the expiry
of one year from the end of the financial
year in which the notice under sec 17(1) was
served.

Conclusion

Conclusion
The revenue from wealth tax is negligible as
compared to the revenue from income tax.
The expenses incurred in collection the
wealth tax is very high compared to the
revenue earned.
An important point to note is that the wealth
tax is unable to keep a check on the
affluent people of the society as it fails to
bridge the gap between the rich and the
poor, as the tax rate is extremely low.