Wealth tax came in to force on 1^st April, 1957. In simple words wealth tax is a form of direct tax imposed on individuals coming in its orbit. It’s very much similar to income tax and has to be paid every year.  Wealth tax is actually imposed on the aggregate market value of the property, irrespective of the fact, the property generates any income or not. Wealth tax is levied on the net wealth of the tax payer, means a cumulative value of the assets possessed by him, excluding exempt assets on due date along with all the debts incurred in context to the taxable assets.

As per wealth tax act, following categories are liable to pay wealth tax

1. An individual person
2. A group of persons owing a property
3. A company or organization
4. An HUF(Hindu undivided family)
5. Person belonging to 1-by -6 categories
6. A representative or heir of a deceased person
7. Non corporative tax payer

However distinguishing further, the scope of chargeability of wealth tax as per income tax act depends upon residential status and nationality of the tax payer. If the tax payer is a citizen and resident of India, in that case the net wealth includes:

1. All assets in and outside India
2. All the debt owed to the tax payer in India and outside India are out of the purview list and is deducted while calculating net wealth.

Further categorizing, if the tax payer is an Indian citizen but a non-resident, then the net wealth would include:

1. All assets in India, except loan and debts interest which are excluded as per income tax act
2. All debts in India are reduced while calculating net wealth
3. All the assets and debts outside India are kept away of the horizon of wealth tax.

Broadly speaking, there are 2 types of assets attracting wealth tax, Owned assets and Deemed assets

Owned assets comprises of:

1. Any land or building included in any commercial building, residential building, guest houses
2. Any farm house located within a range of 25 Km from the local limits of any Municipality, Municipal Corporation or a Cantonment Board.
3. Motor cars
4. Jewellery, bullion, furniture, utensils or anything wholly or partly made of gold, silver, platinum or any other precious metal
5. Yachts, boats and aircrafts
6. Urban land
7. Cash in hand, exceeding an amount of Rs.50, 000 applicable for both individual and HUF. Whereas, in case of companies, an amount not recorded in the books of accounts.

Deemed assets include:

1. Any asset transferred by one spouse to another
2. Assets possessed by minor child, including physically or mentally unfit children
3. Assets transferred to any person or to any association of persons
4. Assets transferred under revocable transfer
5. Assets transferred to daughter in-law(sons wife)
6. Assets transferred to any person or association of person for the good of daughter in-law
7. Amount of interest generated at the hands of tax payer in the assets of the firm or association in which he is a member
8. Self possessed property owned by an individual converted in to joint family property
9. Gift in cash made from one person to another and maintained through book entry by person doing so
10. Assets under ”Impartible Estate”
11.  Assets assigned or leased to the payer, being a member of a housing society
12. Assets possessed by a person in part performance of a contract.

We hope this article could throw some light into the concept of wealth tax.

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