Skip to main content

Wealth Tax in India

Download Tax Saving Mutual Fund Application Forms

Invest In Tax Saving Mutual Funds Online

Buy Gold Mutual Funds

Leave a missed Call on

94 8300 8300

 

 

Wealth tax in India is a part of direct taxes just like income tax. As Income tax is levied on the income you earn, Wealth tax in India is levied on wealth you have accumulated. As wealth itself is somewhat misinterpreted term so no middle class person calls itself wealthy and thus do not pay heed to wealth tax. But wealth has its own definition as per wealth tax act, 1957. This article is about understanding the basics of wealth tax in India , who should pay this and consequences of non-compliance. Did you know: If you evade wealth tax payments, then tax authorities may impose penalty of upto 500% of the Tax amount sought to be evaded and in extreme cases imprisonment of upto 7 years can be imposed

 

What is wealth tax in India?

Wealth tax in India is a tax levied on the specified unproductive assets in your assets/investment portfolio. Unproductive assets mean those assets which don't generate any income (taxable or non-taxable). Like Jewellery, Land, Second house property which is not let out etc. If you are Indian national and resident as per tax laws, you will have to pay tax on your global assets too.

Every individual and HUF has to pay wealth tax @1% if the wealth exceeds Rs 30 lakh and file wealth tax return by 31st July immediately following the end of financial year. However date of filing return may vary in cases where the accounts are required to be audited. Also keep in mind that this tax is on per year basis.

What assets constitute wealth as per wealth tax in India?

Below are the assets details as defined as wealth under wealth tax act.

Basically wealth has been divided in 6 types – House, Motor cars, Jewelry, Air/Water vehicles and Land and even cash in excess of Rs 50,000/- . As I mentioned above that this tax is on unproductive assets. So if you have cash of Rs 2 lakh in hand and is not generating any return (taxable or non taxable) then this will be treated as your wealth and falls in the purview of wealth tax. All mutual funds, Fixed deposits, Exchange traded funds, Insurance policies etc. does not fall under wealth tax act. But,

  • if you have second house which is not let out for 300 or more days then the value of that house becomes a part of your wealth, If you have farm house situated within 25 km of municipality limits then also it becomes your wealth,
  • Motor cars if not being used for business purpose is a part of your wealth
  • Jewelry includes jewelry, bullion, furniture, utensils, or any other article made up of gold, silver, platinum or any other precious metal, unless it is being used for business purpose and is a part of stock in trade. It does not include gold deposit bonds issued under gold deposit scheme.
  • Yachts, Boats, Aircrafts if not being used for business purpose
  • Urban land unless construction on that land is not permissible by law, or is held by assesse for industrial purposes for a period of 2 years from the date of acquisition

Do note that wealth tax is always levied on the net assets, which means that if any kind of loan was taken to buy that asset then that loan amount will be deducted from the total value of assets.

Also keep in mind that it also includes all those assets which are transferred by you to your wife, minor child or to son's wife or any other person or association of person without any adequate consideration.

Do NRIs also have to pay wealth tax in India?

Yes, NRIs are also subject to wealth tax for the Assets purchased in India. However there's one exception here. If NRIs are coming back to India for good, bring along with some assets or purchase the assets as defined in the wealth tax act from the money they brought from the country of their residence, that money and purchases are exempt from this law. But the condition is that they have to make the purchases within 1 year prior to the date of return/comeback or at any time thereafter. The exemption is available for 7 successive assessment years from the date of return to India.

Valuation of Assets and Computation of wealth tax in India

Valuation date for Assets comes under wealth tax purview is the last day of previous year i.e 31st March. Here's how you can compute your wealth tax:

Details

Amount

A

Value of Assets belonged to Assesse ( including those given to family members without adequate consideration)

-

B

Assets exempted under Wealth tax act

-

C

Gross wealth (A-B)

-

D

Debts/Loans belonged to Assets under Gross Wealth

-

E

Net Wealth (C-D)

-

F

Exemption Limit

30 lakh

Wealth Chargeable to Tax @ 1% (E-F)

-

Conclusion:

As they say ignorance is no excuse and this applies to Wealth tax also. If you think that you fall under the purview of wealth tax but have been avoiding or evading just under the pretext of ignorance, then get up and do the calculations as per the table above , You may take a professional help who may also help you in some tax planning and reduction in your tax liability.

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

Leave a missed Call on 94 8300 8300

Leave your comment with mail ID and we will answer them

OR

You can write back to us at

PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest Mutual Funds Online

Invest Any Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

Download Mutual Any Fund Application Forms

---------------------------------------------

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Franklin India Bluechip
      4. ICICI Prudential Top 100 Fund

B. Large and Midcap Funds Invest Online

      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
      4. Birla Sun Life Front Line Equity Fund
      5. Franklin India Prima

C. Mid and SmallCap Funds Invest Online

      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
      5. Birla Sun Life Dividend Yield Plus
      6. SBI Emerging Businesses Fund
      7. HDFC Mid-Cap Opportunities Fund
      8. ICICI Prudential Discovery Fund

D. Small and MicroCap Funds Invest Online

      1. DSP BlackRock MicroCap Fund

2.Franklin India Smaller Companies

E. Sector Funds Invest Online

      1. Reliance Banking Fund
      2. Reliance Banking Fund
      3. ICICI Prudential Banking and Financial Services Fund

F. Tax Saver Mutual Funds Invest Online

1. ICICI Prudential Tax Plan

2. HDFC Taxsaver

      1. DSP BlackRock Tax Saver Fund
      2. Reliance Tax Saver (ELSS) Fund

G. Gold Mutual Funds Invest Online

      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund
      4. Birla Sun Life Gold

H. International funds Invest Online

1. Birla Sun Life International Equity Plan A

2. DSP BlackRock US Flexible Equity

3. FT India Feeder Franklin US Opportunities

4. ICICI Prudential US Bluechip Equity

5. Motilal Oswal MOSt Shares NASDAQ-100 ETF

Popular posts from this blog

ICICI Pru Mutual Fund Dividend

ICICI Prudential Mutual Fund has announced dividend under the following schemes: Scheme Dividend ( Rs /unit) ICICI Pru Capital Protection Oriented Ser V Plan B-D 0.03611325 ICICI Pru Capital Protection Oriented Ser V Plan B Direct-D 0.03611325 ICICI Pru Balanced Advantage Direct-DM 0.06 The record date has been fixed as February 08, 2017. ------------------------------ ------ Invest Rs 1,50,000 and Save Tax upto Rs 46,350 under Section 80C. Get Great Returns by Investing in Best Performing ELSS Funds Top 4 Tax Saver Mutual Funds for 2017 - 2018 Best 4 ELSS Mutual Funds to invest in India for 2017 1. DSP BlackRock Tax Saver Fund 2. Invesco India Tax Plan 3. Tata India Tax Savings Fund 4. BNP Paribas Long Term Equity Fund Invest in Best Performing 2017 Tax Saver Mutual Funds Online Invest Best Tax Saver Mutual Funds Online Download Top Tax Saver Mutual Funds  Application Forms For further information contact  SaveTaxGetRich on 94 8300 8300 ------------------------------ ------ Leave y...

What is Financial Freedom?

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)     There were many things common between our Freedom fighters. All had the Single vision (Free India), common goal (independence) and had a disciplined and focused approach. They were ready to do anything and everything and had made so many sacrifices to see India free . But the road to freedom was not easy .They had faced lot many hardships, went to jail so many times and even confronted physical and mental torture from the British. There was one more thing which proved to be an advantage to our fighters that most of them were professional lawyers. The knowledge of legal issues and its impact on our country at large has helped them counter various bills and proposed new laws by the then government. It is due to their continuous effort that we are able to achieve the goal of Independent Indi...

Hidden Bank Fees

  What Banks Hide From Customers Imagine after a peaceful and exciting holiday you receive your bank statement with steep charges. You then rush to your bank and start confronting staff members and to your dismay, you come to know that the high end debit card was charged very heavily. Wouldn't this cause damage to your finances? So remember, the world outside is full of deceptive and double cheating people. Unethical practices are always used by company sales person in order to meet the target. Credit card companies, mutual funds and bank institutions always play dirty tricks to lure customers and the practices are rampant. So here's how you should be careful while dealing with your banks: High End Debit Card Charges While opening an account with a bank you opt for a debit card with minimal charges. But later on when you upgrade your card and opt for high end debit card the annual charge rise by a good amount. Though such a card has slew of features but it all comes at a high ...

Partial withdrawal from PPF

  Public Provident Fund (PPF) account has a lock in period   If you opened a PPF account to meet your retirement needs,, think twice about withdrawing from this fund before retirement. But provided it's an emergency here are the rules. Public Provident Fund (PPF) account has a lock in period before which you cannot withdraw your money.   The partial withdrawal is allowed after the completion of 6 financial years . This means that you will be allowed a partial withdrawal from 1 April 2017. The maximum partial withdrawal allowed is the least of the following: 50 percent of the account balance at the end of fourth financial year, 31 March 15 50 percent of the account balance of the end of previous financial year, 31 March 17.   There's a loan option available on your PPF account between the fourth and the sixth financial year. You can obtain a loan of up to 25 per cent of the balance in your account. However, this will attract interest of 2 percent more than the prevailing ...

Updating a minor PAN card upon becoming adults

  Updating a minor's PAN card once they become adults A PAN card issued in the name of a minor does not contain the minor's photograph or signature, and therefore, cannot be used as a valid proof of identity. Once a minor PAN card holder turns 18, the relevant changes must be made in the PAN records. A new card is then issued bearing a photograph and signature. Application The applicant is required to fill up the "Request for new PAN card andor changes or correction in PAN data" form. The form can be filled up online by accessing NSDL's Tax Information Network website and clicking on the online PAN application tab. Information The applicant must mention the existing PAN number in the application and check the `photo mismatch' and `signature mismatch' boxes, and submit the online form. The form must also be printed out, signed by the applicant, and submitted along with two photographs. Documents Identity and address proof in the form of a copy of the app...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now