Procedure of calculating Wealth Tax

Procedure of calculating Wealth Tax

Wealth tax is not payable on income but payable only because a person is wealthy. Wealth tax is levied when an individual’s wealth exceeds Rs.30 lakh. It is taxed at the rate of 1% of the wealth.

Persons liable to pay wealth tax:

Individuals, HUFs and companies (except the not-for-profit companies registered u/s 25 of the Companies Act, 1956) are liable to pay wealth tax.

Due date of filing wealth tax:

The due date of filing wealth tax return is the same as that for filing of return of income, which is 31^st July.

Factors upon which Wealth Tax depends:

Wealth tax depends on two criteria-Residential status and citizenship.

In case of an Indian citizen, being a resident, his global wealth is liable to be taxed in India. In all other cases only their wealth situated in India is liable to be taxed.

Liability of wealth tax:

I.            In the case of an individual who is a citizen of India and resident in India, a resident-HUF and company resident in India -Wealth tax is chargeable on net wealth comprising of all of his assets in India and outside India. All debts in India and outside India are deductible in computing the net wealth.

II.            In the case of an individual who is a citizen of India but he is a non-resident or not ordinarily resident, HUF, non-resident or not ordinarily resident in India and a company being a non-resident in India – All of his assets in India except loan and debts interest whereon is exempt from income-tax under section 10 of the Income-tax Act are liable to be taxed. All of his debts in India are deductible in computing the net wealth. All of his assets and debts outside India are exempted from the scope of Wealth Tax Act.

III.            In the case of an individual who is not a citizen of India whether resident, non-resident or not ordinarily resident in India – All of his assets in India except loan and debts interest whereon is exempt from income-tax under section 10 of the Income-tax Act are liable to be taxed. All of his debts in India are deductible in computing the net wealth. All of his assets and debts outside India are exempted from the scope of Wealth Tax Act.