Reason why Wealth Tax Act 1957 is abolished

Back Ground

Wealth Tax act is an act of Parliament of India which provides for levying of Wealth Tax on the individual, HUF, Company, is in possession of, on the Corresponding Valuation Date. It is applicable in all over the India including Jammu & Kashmir. It was last amended by financial Bill 2012.

Finance Minister Arun Jaitely Presented Union Budget 2015-16 for FY 16 in February 28 2015 in Lok Shaba.

The Finance Minister Believes that wealthier people should pay more. He decided to abolish wealth tax and replace it by 2% surcharge (means additional payment other than Tax). Wealth Tax used to be 1% on Net wealth exceeding 30 Lakh rupees and Non-resident Indians were exempted from the tax for several years.

   

Some of the Major drawbacks of Wealth Tax and reason behind abolishing are:-

·         Wealth should be valued by registered valuer which increase the cost and burden for assesse.

·         Assets like Jewelleries, unaccounted assets, car etc are not easily traced.

·         As we know that Wealth tax is not paid by all assesse. As per the report of 2011-12, near 1.15 lakhs people paid this tax.

·         This tax is not the main and significant tax with total collection of the Direct Tax .

So it takes hassles the filing of Wealth tax and simplifies the process of filing a return as you have to pay 12%  instead of 10% In the surcharge.

It will also lead to more people filing it as earlier a number of people  were not even paying Wealth Tax

Regards

Keshav Kumar KC

CA Final 

Thanks 

Looking forward for your comments so that i can do my best.

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E Filing of Wealth Tax Return Mandatory Except Individual, HUF not liable to Tax Audit us 44AB

As Per CBDT notification no. 32/2014 dated 23-06-2014 regarding wealth tax return, few major changes has been made regarding filing of wealth tax return. Below are the summary of changes along with notification:.

1. New wealth tax return form BB shall be applicable from assessment year 2014-15.
2. E filing of wealth tax return is mandatory for all type of persons for assessment year 2014-15 onwards except (Individual / HUF to whom provision of section 44AB (tax audit) is not applicable)
3. Individual / HUF to whom provision of section 44AB (tax audit) is not applicable in assessment year 2014-15 may file wealth tax return on paper form.
4. Exemption to Individual / HUF is granted (as per sr no -3 above) only for AY 2014-15.so from next year (AY 2015-16) all person are required to e file wealth tax return with digital signature.
5. E filing is to be done with digital signature.
6. Nothing is to be attached with wealth tax return like statement of  computation of tax payable ,valuation report of registered valuer, proof of tax or interest deposit.
7. E filing process will be notified in due course.
8. Due date to file wealth tax return is same as of Income Tax return.

Notification

S.O.1576 (E) .— In exercise of the powers conferred by clause (ba) and clause (bb) ofsub‐section (2) ofsection 46 read with section 14A and section 14B of the Wealth‐tax Act, 1957 (27 of 1957), the Central Board of Direct Taxes

herebymakesthe following rulesfurtherto amend the Wealth‐tax Rules, 1957, namely:—

1. (1) These rulesmay be called theWealth‐tax (1st Amendment) Rules, 2014.

(2) They shall come into force on the date oftheir publication in theOfficialGazette.

2. In the Wealth‐tax Rules, 1957 (hereinafterreferred to asthe “said rules”),—

(i) forrule 3,the following rule shall be substituted, namely:–

“3.Form ofreturn of net wealth. — (1) The return of net wealth referred to in section 14 shall—

(a) in respect of assessment year 2013‐14 and earlier assessment years in the case of individuals, Hindu undivided families and companies, be in Form BA and shall be verified in the manner specified therein.

(b) in respect of the assessment year 2014‐15 and any other subsequent assessment year in the case of individuals, Hindu undivided families and companies be in Form BB and shall be verified in the manner specified therein.

(2) Subject to the provisions of sub‐rule (3), for the assessment year 2014‐15 and any other subsequent assessment year, the return of net wealth referred to in sub‐rule (1)shall be furnished electronically under digital signature.

(3) In case of individual or Hindu undivided family to whom the provisions of section 44AB of the Income‐tax Act, 1961(43 of 1961) are not applicable, the return of net wealth referred to in sub‐rule (1) may be furnished for

assessment year 2014‐15 in a paper form.

(4) The return of net wealth required to be furnished in Form BB shall not be accompanied by a statement showing the computation of the tax payable on the basis of the return, or proof of the tax and interest paid, or any document or copy of any account or form of report of valuation by registered valuer required to be attached with the return of net wealth under any provisions of the Act.

(5) The Director General of Income‐tax (Systems) shall specify the procedures, formats and standards for ensuring secure capture and transmission of data and shall also be responsible for evolving and implementing

appropriate security, archival and retrieval policies in relation to furnishing the returns in the manners specified in

sub‐rule (2).”

3. In the said rules, in Appendix, after Form BA,the following Form shall be inserted; namely

DOWNLOAD FORM BB

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Do you have to pay wealth tax?

Do you have to pay wealth tax?

Very few taxpayers have heard of it and fewer pay it. However, this is no reason for you to ignore wealth tax. This tax is payable if the market value of certain assets exceeds 30 lakh. The tax is 1% of the combined value of such assets.

Wealth tax targets unproductive, non-essential and idle assets. In the crosshairs are two of the biggest obsessions of Indian investors: property and gold. If you have bought a second house and not given it on rent, the value of the property will be included while computing your wealth tax liability. Of course, the outstanding loan taken to buy the property will be deducted from this. Gold and silver, whether bought, gifted or inherited, will also be included in the calculation. Even the cash you keep in your locker at home is liable to wealth tax.

However, productive and financial assets, such as commercial property, bonds, fixed deposits, stocks, Ulips, gold funds, mutual funds, your savings account bank balance and gold exchange traded funds (ETFs) are exempt from wealth tax. This tax is not taken very seriously by taxpayers because the Central Board of Direct Taxes is busy with other, more important, ones, such as corporate tax, income tax, service tax and excise. Wealth tax accounts for less than 0.25% of total direct taxes and is minuscule in the total revenue collection. Last year, it contributed 866 crore to the total revenue collection of 1,038,036 crore.

The taxman's disinterest is surprising because, although small, this is a regular stream of tax collection . Unlike income tax, which is levied on earnings just once, wealth tax is payable every year for the same assets. One would have thought that wealth tax collections would see an exponential rise as India's rich became richer. Instead, these collections have witnessed a slow growth, rising 10% from 787 crore in 2011-12 to 866 crore in 2012-13.

This doesn't mean the taxman will not go after you for not paying it. Direct tax collections have been below the target set in the budget and the CBDT is under pressure to improve compliance. There is a stiff penalty for evading wealth tax. Incorrect declaration of wealth can invite a fine of up to 500% of the evaded tax. One can also be jailed for up to seven years if the tax due is over 1 lakh. Remember, wealth tax evasion is easy to detect because the assets are tangible and undervaluation is not difficult to prove.

Are you liable to pay wealth tax? Fill the table provided here to know if you are rich enough to fall in its ambit. If the total figure exceeds 30 lakh, you have to pay 1% wealth tax on that amount. This can be paid online or deposited at any designated bank branch. The wealth tax return is to be filed using form BA and the last date for doing so is 31 July. If the assessee is liable to audit, the last date is 30 September.

Source: TOI

Tags: Wealth Tax, Do you have to pay wealth tax?

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Wealth Tax Act, 1957

The Wealth Tax Act was enacted in 1957 and was made applicable effective April 1, 1957. It is chargeable on net wealth only after the allowed exemptions and any debts are deducted.

Introduction

The Wealth Tax is a part of the Finance Act and a branch of the income tax. It was dealt by the same hierarchy of officers of the Income Tax Department. The Wealth Tax Rules, 1957 were framed for the implementation of the Act.

Structure of the Act

§  This Act had 47 sections under 13 chapters.

§  Section 2(c) defines Assesses

§  Persons on whom any proceedings of the act have been taken

§  Persons deemed to be Assesses

§  Persons default under this Act

§  Rate of Wealth Tax is 1% after Rs. 15 Lakhs of net wealth

§  Firms, Banking Company, Insurance Company, Transportation Company engaged in transportation of passengers or goods by ships, charitable company, a company incorporated outside India, Co-operative Societies, Social clubs, political parties, mutual funds etc. are exempted from paying wealth tax.

§  Section 2(ea): Exempted Assets: House meant exclusively for residential purpose, jeweller, buullion and other precious articles used as stock-in-trade, motor cars, urban land, gold deposit bonds etc.

§  Section 2(m): Net Wealth

§  Section 2(q): Valuation Date

Chapter II

§  Section 3: Charge of wealth tax

§  Section 4: Net wealth to include certain assets

§  Section 5: Exemptions in respect, of certain assets

§  Section 6: Exclusion of assets and debts outside India

§  Section 7: Value of assets how to be determined (Rules for determining value of asset)

§  Section 14: Return of Wealth

§  Section 16: Best Judgment Assessment

§  Section 17: Wealth Escaping Assessment

§  Section 19: Assessment in case of a deceased person

§  Section 20: Assessment after partition of a Hindu Undivided Family

§  Section 20A: Assessment after partial-partition of a Hindu Undivided Family

§  Section 35: Rectification of mistakes

§  Section 46: Power to make rules

This Article is written by CMA Samir Biswal. He can be reached at cmasamirbiswal@gmail.com

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