Under the Act, the tax is charged in respect of the wealth held during the assessment year by the following :-
- Hindu Undivided Family (HUF)
Can ignore Wealth Tax?
Penalties related to ignorance of wealth tax are much more severe as compared to that of income tax. Remember that ignoring wealth tax can lead to serious problems for a taxpayer, with the penalty ranging from 100% to 500% of the unpaid tax, and in extreme
cases, even jail.
What is Taxable?
The assets which are taxable under the Wealth Tax Act are:
- Residential property other than one house
- Cars (unless used for commercial hiring)
- Precious metals including those in the form of jewellery
- Air crafts, yachts, boats
- Urban land
- Cash in hand in excess of Rs 50,000.
In addition to these, all assets transferred by individuals to their minor children and to a spouse for inadequate consideration also attract wealth tax.cases, even jail.
What is exempt from Wealth Tax?
Following assets are exempt from the purview of Wealth Tax:
- any one residential property
- commercial property
- financial assets like shares, mutual funds, debentures.
- any outstanding loan taken to buy the asset.
- any residential properties which are rented for at least 300 days in a year. Remember that the rental income from such property is counted under Section 24 as “Income from House Property” and taxed under Section 24.
In India, the extent of taxable wealth for individuals differs with their residential status. For resident Indians, net taxable wealth will include all assets in India and abroad whereas for non-resident Indians, net taxable wealth includes only those assets which are in India.