Wealth tax in India
Items taxable under wealth tax
- Any building/apartment land ("house"), whether residential or commercial or meant as guest house, including farm house within 25 km from local limits of any municipality, but excluding;
- House allotted by company to any employee/director/officer, who is in whole-time employment, having gross annual salary of less than Rs 5 lakh;
- Any house (residential or commercial), which forms part of stock-in-trade;
- Any house, which assessee may occupy for his business or profession;
- Any residential property that has been let out for at least 300 days in the previous year;
- Any property in the nature of commercial establishments or complexes;
- Motors cars (other than those used by assessee in the business of running them on hire, or as stock-in-trade);
- Jewellery, bullion, furniture, utensils or any other article made wholly or partly of gold, silver, platinum or any precious metals, or any alloy containing one or more of such precious metals (except when held as stock-in-trade, or as gold deposits bonds);
- Non-commercial yachts, boats and aircraft;
- Cash in hand with individuals and HUFs in excess of Rs 50,000;
- Urban land; and
- Unrecorded sums.
Rate of Wealth-tax
..there shall be charged .., wealth-tax in respect of the net wealth on the corresponding valuation date of every individual, Hindu undivided family and company, at the rate of one per cent of the amount by which the net wealth exceeds fifteen lakh rupees.
Wealth tax is payable when an individual hold assets worth more than Rs. 15 Lakh,
Items exempt from wealth tax
There certain exemptions available as per section 2(ea)
ONE HOUSE IS EXEMPTED BY WHAT EVER NAME IT IS CALLED. IF IT IS STOCK IN TRADE THEN NOT TAXABLE.
URBAN LAND IF IT IS VACANT AND EXCEEDING 450 SQ METER IT IS TAXABLE.
CASH EXCEEDING 50,000 IS TAXABLE IF RECORDED IN BOOKS OF ACCOUNT THEN NOT TAXABLE.
Question: Wealth tax / What is the difference between Freehold land
and lease hold land and what are its effects on wealth tax? fm email@example.com>
Question: Income tax / difference between Freehold land and lease hold
What is the difference between Freehold land and lease hold land and what are its effects on Income tax ? From: <firstname.lastname@example.org>
ANSWER UNDER WEALTH TAX ACT ANY RIGHT IN LAND IS TAXABLE IT DOES NOT MATTER IF IT IS A FREEHOLD OR LEASEHOLD. FREEHOLD IS OWNED BY YOU AND LEASEHOLD IS A RIGHT FOR CERTAIN PERIOD (reply sent-070728)
Question: I am a individual Real Estate businessman ?
I am an individual. I hav a business of buying and selling flats. Will my stock in trade, i.e. my stock of flats be covered under Wealth tax ? If not then under what provision ?
Any Stock in trade for the purpose of business is not an asset and accordingly it is not to be treated as Wealth. Therefore, you are not required to pay any wealth on the stock in trade held by you for the purpose of your business.
Kindly note that it is always better to submit a wealth tax return where the total value of your assets minus liabilities are above 15 lakhs to protect yourself from any
mis-interpretation by the department. In case you have shown jewelleries in your Balance Sheet by filing your return you are showing or disclosing your jewelleries to the department and at the time of search it will protect you from getting the assets seized.
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