Are you aware about your liability to pay Wealth Tax?

The word “Wealth Tax” itself is self explanatory, it is the tax imposed on the net wealth of an individual. However understanding the meaning to wealth in context of Wealth Tax is very important. Wealth is the monetary value i.e. the market value on the date of tax assessment of all the assets owned by an individual, HUF or company. Every individual and HUF whose net wealth as on March 31 exceeds Rs 30 lacs is required to pay wealth tax @1% of the amount that exceeds Rs30 lacs. Wealth tax is another type of direct tax by which tax is imposed on individuals falling under its purview. It is an annual tax like income tax.

Chargeability to wealth tax depends on the residential status of the assesses similar to the residential status for the purpose of the Income Tax. Net wealth means taxable wealth. Net wealth is the aggregate value of all the assets minus any loans taken in order to purchase these assets.

 The assets that are subject to wealth tax are:- Guesthouse, farm-house and residential complex , valuable items like jewellery and any items made up of precious metals like gold, silver, platinum or any other precious metals, aircrafts, yachts, boats that is used for non-commercial purpose, cash in hand that is more than 50,000, for individual and Hindu undivided families, Motor car owned by an individual,  Any urban land situated in the jurisdiction where there is a total population of ten thousand as per last census or within 8 kms of such jurisdiction.

There are some assets which are exempted from the list of wealth tax:- One house is exempt from wealth tax. This is the house you live in, air craft, boat or car used for business purpose provided by the company, furniture, apparels and electronic items that is for personal use, accommodation provided by the company or organization to its employee, the annual salary of the employee is less than Rs 500,000, any land donated for the religious purpose or to charitable trust, any property that is given out on rent for at least 300 days in the year, A residential or commercial house, jewellery, bullion and other precious articles, used as stock-in-trade, Any house occupied by the assessee for the purpose of his business or profession, Any property in the nature of commercial establishment or complexes, Urban land on which construction is not permissible.

To file Wealth tax is similar to filling Income Tax. Also before filing a wealth tax all the essential documents should be attached with the form A. Thus if u fall under the bracket of paying Wealth Tax one should not ignore it. The penalty for the same is 1% interest for every month of delay. Tax evasion invites penalty ranging from 100% to 500% of the evaded amount. Wealth tax returns have to be filed by 31 July.