How to calculate wealth tax in India: The Wealth tax in India is a part of direct taxes just like income tax. The Income tax will be imposed on the income which you earn while the Wealth tax in India is imposed on the wealth you have accumulated. The Wealth tax in India is a tax on the specified unproductive assets in your assets investment portfolio.
The Unproductive assets mean those assets which don’t generate any income which may be taxable or non-taxable Like the Jewelry, Land, Second house property which is not let out. Every individual has to pay wealth tax at the rate 1% if the wealth exceeds Rs 30 lakh and they have to file wealth tax return by the end of financial year. Every individual have to fill up wealth tax return form ITNS – 282 and file return by visiting the income tax collection center.
The assets which are covered under wealth tax are having second house which is not let out for 300 or more days then the value of that house becomes a part of your wealth and also if you have a farm house situated within 25 km of municipality limits then also it becomes your wealth and Motor cars if not being used for business purpose is a part of your wealth and also the Jewelry includes jewelry, bullion, furniture, utensils, or any other article made up of gold, silver, platinum or any other precious metal, unless it is being used for business purpose and is a part of stock in trade. It does not include gold deposit bonds issued under gold deposit scheme. The Yachts, Boats, Aircrafts if not being used for business purpose.
The Urban land unless construction on that land is not permissible by law, or is held by assesse for industrial purposes for a period of 2 years from the date of acquisition and sometime even the assets which are transferred to spouse and minor without enough consideration comes under the wealth tax. All these assets generally comes under the wealth tax. The persons investments in Mutual funds, gold bonds or ETFs, in case flat is on rent for more than 300 days in a financial year is excluded from this wealth tax calculation.
The wealth tax calculation may depend on your asset and the debt liability. If a person is having many of those mentioned assets and at the same time has loans then he has to pay wealth tax at the rate 1%.
The NRIs should also pay wealth tax for the Assets they have purchased in India. Any individual may require a professional CA to calculate your asset valuation and for determining the accurate wealth tax liability. The given below is the general procedure for calculating wealth tax:
Every year the Wealth tax valuation period is from April to March. The wealth tax return has to file before 31st July every year.