Wealth Tax

- Net Wealth for this purposeis computed as follows : Assets (Sec 2(ea)) xxx Add: Deemed Assets (Sec 4) xxx Total xxx Less: Exempted Assets (Sec 5) xxx Assets chargeable to wealth tax xxx Less: Debt owned (Sec 2(m)) xxx Net Wealth xxx - Net Wealth on valuation date is chargeable to wealth- tax in the immediately following assessment year - It is applicable only on Individual, HUF and company. However by virtue of Section 45 of the Act it is not applicable to (i) company registered under sec 25 of the Companies Act (ii) Any co-operative society (iii)Any social club (iv) Any political party (v) Mutual Fund specified u/s 10(23D) of the income Tax Act - Net wealth in excess of Rs. 30,00,000 is chargeable to wealth tax at the rate of 1% (no surcharge and cess) - Assessment Year (Sec 2(d): Assessment year means a period of 12 months commencing from the first day of April falling immediately after the valuation date. - Valuation date (Sec 2(q) : Valuation date is 31 March immediately preceding the assessment year . - Residential status : Wealth tax adopts the residential as determined by the Inome Tax Act. Residential Status of Individuals Basic Conditions (a) He should have stayed in India for a period of at least 182 days during the relevant previous year ; OR (b) He should have stayed in India for at least 60 days during the relevant previous years and at least 365 days in 4 previous years preceding the relevant previous year. A person is resident if he fulfils at least one of the basic condition else Nonresident Exceptions for Basic conditions (a) An individual citizen of India leaves India for the purpose of employment or as a crew member on Indian ship the he should have stayed in India for at least 182 days in India during the relevant previous year. (b) A citizen of India or a foreign national of India origin comes on a visit to India has stayed for at least 182 days in India during the relevant previous year. Additional Conditions (a) He should be resident for at least 2 years out of 10 previous years preceding the relevant previous years.

(b) He should have stayed in India for at least 730 days in 7 previous years preceding the relevant previous years. A resident is ordinary resident if he fulfils both the additional condition else not ordinary resident Residential Status of Company Resident in India: (a) If the Company is Indian Company. (b) For other companies, the management and control of the company during the previous year is wholly in India. * There are no bifurcations for Ordinary Resident and Not Ordinary Resident * Control and management is normally assumed to be the place where the Board meetings of the company is held Residential Status of HUF A HUF is considered to be resident if its control and management is partially or wholly situated in India. For further categorization as to ordinary resident and not ordinary resident, the additional conditions are verified on the Karta of the HUF . If the Karta satisfies both the additional conditions then it is ordinary resident else not ordinary resident. Incidence of Tax RORI RNORI NR In case of India All assets in India All assets in India All assets in India individual, all HUF + + + and company All assets located Deemed Assets Deemed Assets out of India located in India located in India + Deemed Assets All related debts All related debts (whether in India (whether in India or All related debts or outside India) outside India) (whether in India or outside India) In case of foreign All assets in India All assets in India All assets in India national + + + Individual Deemed Assets Deemed Assets Deemed Assets located in India located in India located in India All related debts All related debts All related debts (whether in India (whether in India (whether in India or or outside India) or outside India) outside India) Assets (Sec 2(ea) ) Guest house, residential houses and commercial building (Sec 2(ea) (i) :it includes any building or land appurtenant thereto whether used for residential or commercial purpose or for the purpose of guest house. It also includes farm house situated within 25 km from the local limits of any municipality or a cantonment board Exceptions : (i) Residential house provided : it is exclusively used for residential purpose ; it is allotted by a company to an employee, or an officer or director who is in whole time employment, the gross salary should be less than Rs. 5,00,000 in the case of such employee, officer or director.

(ii) A house held as stock in trade (iii) A house used for own business or profession: The continous usage of house for business purpose is not necessary to get exemption. (iv) a let put house property : It should be let out for a minimum period of 300 days in the previous year to avail the exemption. (v) A commercial complex Motor Cars (Sec 2(ea)(ii) : exception are (i) motor cars used by the assessee in the business of running them on hire (ii) held as stock in trade ( iii) Heavy vehicles Jewellery, bullion, utensils of gold, silver etc. (Sec 2(ea) (iii) ) : any article made wholly or partially of gold, silver, platinumor any other previous metal or alloy containing one or more of such precious metals are treated as assets. Exception are (i) held as stock in trade (ii) Gold deposit bond. Yatchs, boats and aircrafts ( Sec2(ea)(iv)