Define wealth tax, liability to pay wealth tax & its calculation
Wealth tax is a kind of direct tax which is paid annually. But every individual is not liable to pay wealth tax. So let's find out that whether you are liable to pay wealth tax or not?
What is wealth tax
If the wealth of any person crosses the limit of Rs. 30 lakhs in a financial year, then he is liable to pay wealth tax. It is just 1% of your total income Who is liable to pay wealth tax
Following persons are liable to pay wealth tax:What is the scope of wealth tax
Following are the things included in wealth tax:
1. Residential units (including guest houses)
2. Commercial building
3. Jewelry, gold and other precious metals including the accessories made from precious gems
4. Yacht, boat and aircraft (other than those used for commercial purposes by the taxpayer)
5. Urban land
6. More than Rs. 50,000 cash in hand of individual and H.U.F.
7. Motor car (other than those used in hiring business of the taxpayer and cars used in stock-in-trade)
Following are the things not included in wealth tax or things excluded from wealth tax:
1. House or a portion of house or plot of land of an individual or Hindu Undivided Family (H.U.F.)
2. Portion of land measuring 500 meters or less
3. Money or value of asset brought by Indian citizen or P.I.O. (Person of Indian Origin) to his permanent location or value of asset purchased with such money right before or after one year of the date of his return
4. House purchased by taxpayer for the purpose of his own business or profession
5. Any residential property lend on rent for minimum 300 days in a financial year.
6. Any property like commercial complexHow to calculate wealth tax
You have to estimate the market value of your assets to find out that whether you are liable to pay tax or not. If you are paying any loan on your property, then the wealth tax is paid on the net value calculated after deducting outstanding loan. For example: if the market value of your property is Rs. 50 lakhs, and you are paying loan of Rs. 35 lakhs then you have to pay wealth tax on Rs. 15 lakhs.
However, if you have lend house on rent for more than 300 days in a financial year, then you can get concession on paying wealth tax on such property. The date of paying wealth tax is similar to income tax return, which is determined to be 31st July.