Government of India framed the Wealth tax act in 1957 which was mandatory for every individual/HUF/company to disclose all the assets which they own in their name and are required to pay a tax of 1% of the amount by which their wealth exceeds ₹30 lakhs. Due to involvement of complexities Wealth Tax Act 1957 has been abolished entirely w.e.f 1st April, 2016. This means that the return of wealth need not be filed for the Financial Year 2015-16.
Previous to the financial year 2015-16 below are the rule related to Wealth tax act 1957
Wealth tax is not a very important or high revenue tax in view of various exemptions. Wealth tax is a socialistic tax.
It is not on income but payable only because a person is wealthy.
Wealth tax is payable on net wealth on ‘valuation date’. As per Section 2(q), valuation date is 31st March every year.
It is payable by every individual, HUF and company. Tax rate is 1% on amount by which ‘net wealth’ exceeds Rs. 30
lakhs. No surcharge or education cess is payable.
No wealth-tax is chargeable in respect of net wealth of any company registered under section 25 of the Companies Act, 1956; any co-operative society; any social club; any political party; and a Mutual fund specified under section 10(23D) of the Income-tax Act [section 45]
|Assets specified in Section 2(ea) chargeable in the hands of assessee on the basis of location of the assets and the assessee’s nationality and residential status||xxx|
|Less: Aggregate value of all the debts owed by the assessee on the valuation date incurred in relation to the above said assets||(xxx)|
|Less: Assets exempt u/s 5||(xxx)|
|Add: Deemed asset in the assessee’s hands u/s 4||xxx|
|Net Wealth as per Wealth Tax Act||xxx|
Rounding off Net Wealth [Section 44C] : The net wealth computed above shall be rounded off to the nearest
multiple of one hundred rupees.
Debt should have been incurred in relation to the assets which are included in net wealth of assessee. Only debt
owed on date of valuation is deductible.
In case of residents of India, assets outside India (less corresponding debts) are also liable to wealth tax. In case of non-residents and foreign national, only assets located in India including deemed assets less corresponding debts are liable to wealth tax [section 6].
Net wealth in excess of Rs. 30,00,000 is chargeable to wealth-tax @ 1 per cent (on surcharge and education cess).
Assessment year – Assessment year means a period of 12 months commencing from the first day of April every year falling immediately after the valuation date [Section 2(d)].