Skip to main content

DTC and Wealth Tax

 

 


   AS per the Direct Taxes Code Bill 2010 (the 'Code') proposed to be effective from April 1, 2012, every person other than any non-profit organisation, shall be liable to pay wealth tax @1% on net wealth exceeding 1 crore. Thus, every individual, HUF and company will be subject to wealth tax on the net wealth as on the valuation date i.e., March 31of the financial year.


   The net wealth shall be computed as per the formula prescribed under DTC. The formula provides that the net wealth shall be the aggregate value of all the specified assets of the person on the date of valuation as reduced by the aggregate value of all the debts owed by the person, which have been incurred in relation to the specified assets.


   The scope of assets has been widened to include many new assets. It is proposed that the assets would include the following:


   Any building or land appurtenant thereto; a farm house situated within 25 km from local limits of any municipality or municipal corporation or cantonment board; any urban land; motor car, yatch, boat, helicopter or aircraft other than those used for 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 other precious metal other than those used as stock-in-trade; archaeological collections, drawings, paintings, sculptures or any other work of art; watch having value in excess of fifty thousand rupees; cash in hand in excess of 2 lakh in case of individuals and HUF; deposits in a bank located outside India in case of individual and HUF; any interest in a foreign trust, etc, other than a foreign company; any equity or preferential shares held by a resident in a controlled foreign company as specified under the Code.


   It is pertinent to note that the scope of wealth tax has been widened in comparison with the Income Tax Act 1961 as a number of new assets have now been brought under the definition of assets.


   It is important to take note of the exclusions/ exemptions in respect of investment/ assets, which will not be considered for the purposes of the wealth tax. These include assets located outside India in respect of non-resident; any one house or part of the house or one vacant plot of land not exceeding 500 sq mt, in the case of individuals and HUF; a house meant exclusively for the residential purposes allotted by a company to an employee; any house for residential or commercial purposes, forming part of the stock-in-trade or used by the tax payer for the business purpose, a house that has been let-out for 300 days or more in a financial year; any house in the nature of commercial establishment or complexes.


   DTC also provides that if the specified assets are held by certain relatives such as spouse or minor child, associate or associated entities of the person then, they shall be deemed to be belonging to such a person, if they fulfill certain conditions specified therein and shall be charged to wealth tax in the hands of the tax payer.

 

Popular posts from this blog

What are the factors affect the changes in Interest Rate of Fixed Deposits?

  What are the factors affect the changes in rate of Fixed Deposits? Fixed Deposits are now considered to be a very old fashioned method of saving, but still attract many investors since they have guaranteed returns at the end of the tenure of the investment at a decent interest rate. There are various factors that affect the rates of interest for a Fixed Deposit. Policies of the Reserve Bank of India   - The several norms and restrictions posed by the Reserve Bank of India , in order to gain optimum control over credit and inflow and outflow of fund throughout the country. The repo rate changes, cash reserve ration tends to change and these changes affect the banking products like Fixed Deposits, loans etc. Recession   - When unemployment in a country crosses the benchmark set Recession hits, and slowly the country faces an economic slow movement, affecting the purchasing power of the people in the country, forcing the Reserve Bank of India to release more funds in the financial marke...

Capital Protection Oriented Funds

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   Capital Protection Oriented Funds   Erosion of capital is one of the key concerns for investors wanting to invest in equity mutual funds. To address this concern, asset management companies have launched Capital Protection Oriented Funds (CPOFs). What are CPOFs? CPOFs are generally three to five-year, closed-ended funds where 70-80% of the portfolio is invested in fixed income securities, which mature on or before the scheme's tenure. The investment in fixed income securities grows to 100% at the end of the tenure, providing the investor with capital protection. The remaining portion (20-30%) is used to take exposure to equity, which provides the upside. Exposure to equities is either by directly buying equity stocks (plain vanilla CPOFs) or by b...

Understanding Your Cibil Credit Information Report

   WE ARE all familiar with the anxiety and uncertainty that we feel when applying for a loan. After all, it's the lender who decides whether we can own our dream home, our first car, or whether our children can pursue higher education. In a nutshell, a better life depends on the lender's decisions.    While other factors do play a part in the lender's decision, the Cibil Credit Information Report ( CIR ) plays a crucial role in a lender's decision to approve a loan application.    Previously, lenders would treat all loan seekers equally. Each applicant, if approved by the lender's internal credit policy, would be charged at the same interest rate for a particular loan size and purpose. The lenders would charge a higher interest rate to all the borrowers, in order to compensate for the possible default of a small portion of the loan disbursed. In other words, it's like a professor (the lender) punishing an entire class (borrowers) for the mischief played b...

Good Loan

Why Is It A Good Loan?: Loans against gold are cheaper and better than personal loans as the former are available at lower interest rates. In contrast, the interest rates on personal loans are not standardised and can vary from bank to bank. Also, a personal loan depends on a host of factors including, the borrower's salary, profession and the purpose for which the loan is being taken.      For instance, the interest rate on a personal loan of 5 lakh falls in a wide range of 15-30%. But loans against gold are available for as low as 11%. Secured borrowing such as a loan against gold, investments or property is cheaper because it is backed by some assets, which command a good value at any point of time. If the borrower defaults on the loan, the banks can liquidate the assets to settle the loan account.    Being a secured loan, the risk of default and credit losses is significantly lower in this loan compared to other forms of loan for personal use. Given the lower risk, gold loa...

Mutual Fund Review: ING Dividend Yield

  ING Dividend Yield's small assets enable the fund manager to churn in impressive returns… Strategy The aim of the fund is to invest in stocks which offer a high dividend yield. This fund deploys a value based strategy which aims to gain from investing in fundamentally strong and free cash flow generating businesses. The scheme focuses not only on growth but also on the cash generated by the business, which mostly leads to stable returns even in volatile markets. This fund has a low volatility because of its investment in high yielding stocks. The scheme tries to include stocks that yield dividend above the dividend yield of the Nifty and stocks with liquidity, which throws up a universe of 150 stocks.   Our View Launched in October 2005, this fund invests at least 65 per cent of its assets in high dividend yield stocks. The fund has consistently maintained a mix of stocks across varying market capitalisation, with a higher tilt to mid caps compared to small caps. Howev...
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