FINAL WEALTH TAX
Accepting the recommendations of N. Kaldor to introduce “integrated direct tax system” in India, Wealth Tax Act, 1957 was enacted. The Act was amended from time to time. The major objective of wealth tax has been attainment of equity objective of tax policy because wealth is considered as the major source of inequalities.
The wealth taxation in India is applicable to all citizens of the country and is also called the wealth tax act, 1957. This is also considered to be direct taxes of the country. It is paid on the benefits of property ownership and the person who owns the property has to pay for the wealth tax for the time period for which he retains the ownership. It must be noted that the person has to pay for wealth tax even if it is not gaining any income. Reasons for levying Wealth Tax
The wealth tax act is important direct tax legislation. It is a tax on the benefits derived from property ownership. Stated objectives behind introduction of bill for wealth tax were (a) That it would reduce the possibility of tax evasion
(b) That it would take into account the taxpaying capacity of an individual (c) That it had a large measure of egalitarianism built into it both conceptually and operationally without disincentive effect. Levy of wealth tax was described as a measure to alter the tax structure in a way that would ensure more effective and at the same time a more equitable basis for taxation. Who to pay for the Wealth Tax in India
The person who pays for the wealth tax is called an assesses and he may belong to the categories mentioned below: * A Hindu undivided family
* Non corporate taxpayers
* A representative of dead individual, or administrator and the executor * A Company
* An agent of Non-resident
* A body of individuals or as association of persons
It should be noted that the tax will be considers on the total income earned from the collections of joint family in case of a Hindu Undivided Family. However, in case of non-corporate payers, they are supposed to pay the tax as per the existing tax rate as their accounts are being audited. Incidence of Wealth Tax
Incidence of tax in the case of an individual depends upon his residential status and nationality. The scope of liability to wealth tax is as follows: (a) In the case of an individual who is a citizen of India and resident in India, a resident HUF and company resident in India; Wealth tax is chargeable on net wealth comprising of
* All assets in India and outside India;
* All debts in India and outside India are deductible in computing the net wealth. (b) In the case of an individual who is a citizen of India but non-resident in India or not ordinarily resident in India, HUF, non-resident or not ordinarily resident in India and a company non-resident in India; * All assets in India except loan and debts interest whereon is exempt from income-tax under section 10 of the Income-Tax Act are chargeable to tax. * All debts in India are deductible in computing the net wealth. * All assets and debts outside India are out of the scope of Wealth Tax Act. (c) In the case of an individual who is not a citizen of India whether resident, non-resident or not ordinarily resident in India: Same as in (b) Wealth Tax Chargeable Assets
Below mentioned are the assets on which the wealth tax has to be paid by the assesses: * Guesthouses, urban farmhouse, residential house and commercial property. * Automobiles for person purposes.
* Precious items such as utensils, bullions, jewellery and furniture. * Aircrafts, Yachts and boats which are used for non-commercial purposes. * For the cash in hand which exceeds 50,000 for Hindu undivided families and individuals. * Urban land which is under the authority of cantonment board or municipality and having a population over 10,000. The following are not regarded as assets while computing the wealth tax:- * A residential...
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