Wealth Tax

Wealth Tax is a Direct Tax under the Wealth Tax Act, 1957  Wealth Tax is applicable for individual, HUF, and Company  Wealth Tax is charged every assessment year on the Net Wealth of the assessee on the valuation date.  Valuation date is 31 March of the previous year  Rate of Tax - 1% on the net wealth exceeding Rs. 15 lakh  Net Wealth = Excess of assets over debts  Wealth Tax is not applicable for: 

Section 25 company  Co-operative society  Social Club  Political party  Mutual Funds 

 Guest

house, commercial building or residential

house  Farm house within 25 kms of the local limits  Exceptions:  House

held as stock-in-trade  Building used in business or profession  Commercial establishment or complex  Residential property let out for not less than 300 days  Residential house occupied by employee or officer or director whose “Gross Annual Salary” is not more than Rs. 5 lac



Motor cars  Exception: 



   

Motor car used by the assessee in the business of running them on hire Motor car treated as stock-in-trade

Jewellery, buillion utensils of gold, silver etc. Yachts, boats and aircrafts (other than those used for commercial purpose) Cash in hand in excess of Rs. 50,000/- for individual and HUF. For others, any amount not recorded in the books of accounts Urban land  Exception  



Land on which construction of building is not permissible Unused land held by the assessee for industrial purpose of 2 years from the date of acquisition Stock-in-trade for a period of 10 years from the date of acquisition

 Step

1 - Find Gross Maintainable Rent (GMR)

 Annual

rent received / receivable or annual value assessed by the local authority whichever is higher, if let our or  Annual rent assessed by local authority or fair rent, if property situated outside the jurisdiction of the local authority  Step  Net  

2 – Find Net Maintainable Rent (NMR) maintainable rent = GMR less

(i) Amount of local taxes levied on the property (ii) a sum exqual to 15% of GMR

 Step

3 - Capitalize NMR for valuation

 If

the property is on free hold land, value of the property = NMR x grossing factor 12.5  If the property is on leasehold and the balance of lease period is more than 50 years, value of the property = NMR x factor 10  ŸIf the property is on leasehold and the balance of lease period is less than 50 years, value of the property = NMR x factor 8 

Rate per sq ft = Value of the property divided by total area (Specify built up / Carpet)

Step 4 – Add premium for the unbuilt area:

The details of all Vacant Urban plots owned by NABARD and recorded in the books of the Accounting Units as on 31-03-2009 should be furnished in the prescribed format.  Wealth Tax is payable in respect of such land which is vacant for more than 2 years as on 31-3-2009.  The details of such vacant land (freehold and / or leasehold), additions/ deletions (i.e new purchases / fresh constructions), if any, and value thereof, during the financial year 2008-09 should also be indicated in the format.  Valuation Certificate by an approved Government Valuer as at the end of the financial year 2008-09, in respect of such vacant land/s, possessed by NABARD should also be furnished. 

 Indicate

the ‘Insured Value” in respect of all motor vehicles as per the insurance value shown in the insurance policy.  Send three legible copies of insurance policies of the motor cars  Please ensure that the insurance value is invariably indicated in the insurance policies and that it pertains to valuation dated 31 March 2009.  In case the period covered under policy is for a broken period i.e July to June or Dec. to Jan or any other such period, then in such cases, copies both the policies are required to be sent so as to cover the entire reference period i.e the period from 1 April 2008 to 31 March 2009