About Wealth Tax
ABCDEFGHIJKLMN
(Querist) 14 November 2009
This query is : Resolved
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Home> Experts > Taxation > valuation of jewellery under wealth tax
In one of the reply in above link, about valuation of Jewelry, Shri Pkpworld has indicated on date 13th Nov'09 that:
"Wealth tax will be charged @ 1% on the net wealth including jewelry in excess of Rs.15 lakhs on the valuation date (31st March of the Previous Year)."
Will any one please let me know about the wealth Tax? What all is considered for valuing wealth? Few like:
(1) Bank account balance.FD etc (2) Jewelry.(3) Stock and Share valuation.(4)Units of Mutual Fund-Valuation.(5) Residential property occupied by the self for living purpose.(6) Any commercial property.(7) Residential Plot.(8) Other residential accommodation –which is not Self occupied
and any thing more which is to be considered for wealth Tax. I do not know how to continue and take part in the old query, so I have asked a fresh query for a guidance.
Bhasker Parikh
Email Id:bhasker.parikh@gmail.com
pkpworld..
(Expert) 14 November 2009
To know more about wealth tax please refer to the Wealth Tax Act, 1956.
bank balanced, stock and share, units of mutual funds, one residential accommodation are exemoted from WT.
It is better to refer the Wealth Tax Act or any guide book of WT to know detials about WT.
Raj Kumar Makkad
(Expert) 15 November 2009
It is better to go through in detail in the Wealth Tax Act, 1956 rather to have contradictory opinions.
Vineet
(Expert) 15 November 2009
Jewelery, residential plot are certainly includible in taxable wealth. Commercial property and other residential accomodation (non SOP) depending upon their tenancy may or may not be included.
For further details refer section 2(ea) of Wealth Tax Act.
ABCDEFGHIJKLMN
(Querist) 17 November 2009
Shri PkpWorld, Shri Rajkumar Makkad and Shri vineet,
First of all I thank you all for giving me some guidance about wealth Tax.
However I am not a legal person/tax consultant or a CA, so it becomes difficult to understand the text of wealth Tax Act1956/1957., and its section 2ea.
I tried to read some more articles and found one of Shri Subhash Lakhotia, a tax expert giving advice/answer about question on CNBC-TV. The text is produced here below. It appears that he has expressed different view than expressed by Shri Vineet, in respect of residential plot. His views indicate that A residential plot of less than 500 sq.meter (as per section 5 of wealth Tax act). So Mr.Vineet can you please enlighten me on above. More over residential Property given on rent for more than 300 days/year is exempted from wealth Tax. Is there any amendment to the views expressed by you/him? Which is the latest one? I would appreciate to have your further views.
Bhasker Parikh
As an individual tax payer or a Hindu Undivided Family, if your net wealth is over Rs 15 lakh (Rs 1.5 million), you can avail of exemptions on your assets. You can reduce your wealth tax to zero.
The easiest way is through property. To get maximum benefits, ensure that every adult family member purchases one immovable property in his/her own name.
Here's why
i. Let's say you are planning to buy a bungalow for Rs 80 lakh (Rs 8 million). Your wealth tax liability would be zero since, as per provisions in the Wealth Tax Act, 1957, one property is fully exempt from the purview of wealth tax.
So it would make sense to buy one property per adult in a family to reap the best of this provision.
ii. All commercial properties are fully exempt from the purview of wealth tax. So if you are holding commercial property -- let's say a shop, an office space or a factory building -- don't worry. You can own as many commercial properties as you like in your own name without having to worry about paying wealth tax.
iii. The Wealth Tax Act also says that all residential properties given on rent for over 300 days a year are exempt from wealth tax.
iv. What's more, Section 5 of the Wealth Tax Act says the exemption for house property extends to vacant land up to 500 square metres (about 5,381 square feet).
It is not difficult to avoid tax legally. This is a double benefit because real estate is a highly appreciable asset.
Now you know what you will say if someone says 'tax' to respond to: Profit!
Vineet
(Expert) 22 November 2009
Dear Shri Parikh
The answer given by me was general in nature considering your general query.
However, tax laws and any other law for that matter contain lot of if, buts, provisos etc which cannot be specified in a single general reply.
The specific points raised in your post are correct:
1. Residential house rented for more than 300 days in a year is not asset.
2. Plot of land within definition of urban land are taxable assets but any Plot of size less than 500 sq mtrs is specifically exempt u/s 5.
3. Any property in the nature of commercial establishment or complex is not an asset.
ABCDEFGHIJKLMN
(Querist) 23 November 2009
Dear Shri Vineet,
Thank you for your valued opinion.
Bhasker Parikh
