A wealth tax is generally conceived of as a levy based on the aggregate value of all household holdings actually accumulated as purchasing power stock (rather than flow), including owner-occupied housing; cash, savings in insurance and pension plans, investment in real estate and unincorporated businesses etc
Wealth tax in India
The Wealth Tax Act is an important direct tax legislation, which came into existence on 1 st April 1957. Wealth tax is levied on the benefits derived from property ownership. The tax is to be paid year after year on the same property on its market value, whether or not such property yield any income.Wealth tax is 1% on wealth exceeding Rs 30,00,000. However, non-residents returning to India are given exemption for seven years.
Under the Act, tax is charged on the following persons in respect of the wealth held by them during the assessment year:
- A company.
- A Hindu Undivided Family (HUF)
- An association of persons or a body of individuals.
- Non-corporative taxpayers whose accounts are to be statutorily audited.
Chargeability to tax also depends upon the residential status of the assessee and the citizenship of a person.
Exemptions
It may be noted here that productive assets like shares, debentures, bank deposits and investments in mutual funds are exempt from wealth tax. The non-productive assets include jewellery, bullion, motorcars, aircraft, urban land, etc. Foreign nationals are exempt from wealth tax on non-Indian assets.
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