How is Wealth Tax Charged in India For the Year 2012-2013?
We have all heard the saying “Desire Is A Well That Never Dries Up”. Wealth is a relative term. It can never be measured. It is never enough .Don’t we all feel that how much ever we have we are not satisfied? Where is that security and feeling of heavenly bliss that money alone can buy? India is a nation which strives to produce millionaires. More the merrier is our motto. Ours is a nation which aspires to be one of the Dollar Billionaires’. We have about 50 people in our country with a Net worth of about 4500 crores. We have about 2 Lakh Dollar Millionaires in our country. Crème De La Crème..... Remember A Golden Key Can Open Any Door .....
The rich are taxed the world over. Remember the Cyprus case in which the rich were taxed, mainly a tax imposed on their bank deposits in order to fund the nation’s bailout package. Can our nation be far behind? Aren’t our neo rich unhappy with the 10% surcharge imposed on their earnings? I would like to remind all of you that the team of Financial Planners at Moneymindz.com are always there for you to plan your Taxation needs in a most efficient manner. You can explore this unique Free Advisory Service just by giving a missed call at 022 6211 6588.
So What Is Wealth Tax
Here we have wealth taxation in India known as the wealth tax act 1957.It is a direct annual tax levied on the ownership of certain assets by individuals and HUF even though these assets may not generate any income. Pensioners, The retired, senior citizens no one has been spared by this tax. This tax needs to be filed by July 31st of the assessment year. Remember always pay your wealth tax on time as the late payment of wealth tax attracts a penalty of 1% of interest per month for each month of delay. Do not even try to evade your wealth tax as a heavy penalty of five times the tax amount due may be imposed.
So How Much Is the Wealth Tax Charged
This is basically an amount of 1% on net wealth above and over 30 Lakhs. Let us consider the net wealth to be 75 Lakhs. Then we have the difference of 75 Lakhs over and above 30 Lakhs. This translates to be 45 Lakhs charged at 1 % .An amount of INR 45000 is charged as wealth tax.
On What Is The Wealth Tax Charged
- Commercial Buildings and nearby land.
- Jewellery, Bullion, Articles made totally or partly of Gold, Platinum, Silver or an alloy of these metals.
- Residential Buildings and nearby land
- Yachts, Aircraft and Boats.
- Guest Houses and the nearby land.
- Urban land located within a local authorities jurisdiction and has at least 10000 people as per the last census conducted before the valuation date. An area within 8 Kms of a local authority like the Central Government.
- A farm house located within 25 Kms of the local limits of a cantonment board or a municipality.
- Cash in hand in excess of INR 50000.
- Precious metals including those in the form of utensils and furniture.
According to the Wealth Tax Act 1957 the following are regarded as deemed assets and wealth tax is charged :
- Assets transferred between Spouses
- Assets owned by minors, unless specially-abled child owns any asset it will not be grouped with the parent’s net income.
- Assets provided to son’s wife or to another person or group of individuals for the benefit of son’s wife.
- Assets that have been transferred to an individual or a group of people. This transfer must benefit the providers or their spouses in either the short or the long term.
On What Is Wealth Tax Exempt?
- A residential property that has been allocated to a full time employee by either the Company, Director, or an Officer with a gross yearly salary lesser than 5 Lakh Rupees.
- A commercial or a residential real estate property that is part of stock –in – process.
- Commercial or real estate property used for official or business purposes.
- A Commercial Complex or an Establishment.
- A residential property that has been put on hire for a minimum of 300 days in the immediate earlier year.
- A land where construction is illegal.
- A land where the building has been set up with approval from proper authorities.
- An unused land owned for industrial purposes. This land should remain unused for 2 years after acquisition.
- The land that has been owned by an assessee for 5 years as stock-in-trade.
- Religious or charitable property owned by a trust or a legal entity.
- Jewellery owned by erstwhile rulers
- Residential Property owned by former rulers.
Advantages Of Imposing Of Wealth Tax On The Rich :
April Showers Bring Out May Flowers
Revenues for healthcare, defence and education must come from somewhere. Ours is a nation with ballooning costs in healthcare and medical treatment. With a rising population, food security for the needy and an excellent public distribution system is necessary. Building of Infrastructure and Bridges is necessary for the growth of the nation.
Big Fish Eat Little Fish
The rich already have enough wealth and taxing them should be no problem.
Everybody Wants To Go To Heaven But Nobody Wants To Die
The rich may not approve of this but the nation’s ballooning current account deficit and fiscal deficit has to be controlled.
Fair Exchange Is No Robbery
The taxes collected from the rich are redistributed among the poor.
Disadvantages Of Imposing Wealth Tax On The Rich
- Tax increases have a negative effect on the economy as they lead to spending cuts which slows growth.
- Inflation may rise and high wealth tax on the rich might indirectly affect the middle class.
- Taxing of the rich transfers money from the private sector to the public sector where it might not be efficiently spent or may land in the hands of greedy politicians for their campaigns.
- Here we have seen how many rich individuals in USA and France have left their nation and reside in other countries. Rich HNI Indians would do the same and this might affect the progress of the nation.