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Look how I made my riches
Kairav Shah | March 12, 2007
Wealth tax virtually stands abolished in India. Productive assets are free from wealth tax without any limit. Shares, units, commercial buildings are treated as productive assets. It is applicable to the whole of India.
It shall be deemed to have come into force on the April 1, 1957 and is an important direct tax legislation. The tax is to be paid year after year on the same property on its market value, whether or not such property yield any income.
Only the following are considered as 'assets' for the purpose of wealth tax, unless these are used for business or profession:
Wealth tax is chargeable asset
However, the following types of land are exempt
Percentage of charge
The net wealth so arrived at is charged to tax at the rates specified. The present rate of tax is 1 per cent of the amount by which the net wealth exceeds Rs 15 lakh Rs 1.5 million).
The rate is same for individuals, HUF's and companies. Special rules have been laid down in the regarding valuation of various assets like immovable properties, shares, and jewellery.
Illustration: Mr Shah has the following assets and liabilities on the Valuation Date
Compute Net Wealth and Wealth Tax?
Wealth Tax: 1 per cent of (Net Wealth -Rs 15 lakh) = 1 per cent of Rs 10.4 crore (Rs 104 million)
Hence Mr Shah has to pay Rs 1,04,700 as Wealth Tax.
The Income Tax authorities specified in section 116 of the Income Tax Act shall be the wealth-tax authorities for the purposes of this Act and every such authority shall exercise the powers and perform the functions of a wealth-tax authority under this Act, in respect of any individual, Hindu undivided family or company, and for this purpose his jurisdiction under this Act shall be the same as he has under the Income Tax Act by virtue of orders or directions issued.
Wealth planning doesn't involve anything difficult, though most ordinary people think it does. We look at wealthy people and wish we knew their secrets.
The truth is there aren't any real secrets, but there are some rules that go into creating a viable wealth plan. The real reason most people don't become wealthy is that they don't sit down and develop a financial plan that will ensure they become wealthy.
They have some vague ideas and make some half-hearted investments, but they are a long way from becoming truly wealthy because in order to create wealth, you must have clear goals and objectives in place.Thus, as a wise financial planner, after taking into consideration the risk profile, return and liquidity, one should inculcate financial discipline. This will take a long way but to be successful in ones life, only after bearing in mind, the wealth tax implications along with other statutory tax laws.