Wealth tax is required to be paid on the market value of assets owned by individuals and Hindu Undivided Families with net wealth greater than Rs.30 lakh. Resident Indians pay wealth tax on global assets while non-residents pay on domestic assets.
In India, Wealth Tax is the tax required to be paid by anyone whose personal assets exceed Rs 30 lakh. It is a form of Direct Tax and is levied under the provisions of the Wealth Tax Act, 1957. Wealth Tax is calculated on the market value of the assets owned and every individual and Hindu Undivided Family whose net wealth is greater than Rs 30 lakh is liable to pay wealth tax.
Resident Indians who own global assets are liable to pay wealth tax while non-resident Indians as well as foreigners are required to pay wealth tax only on their assets located in India.
However, Wealth Tax is not applicable to the following:
- Artificial Judicial Persons
- Partnership firms
- Association of persons (AOPs)
- A company registered under Section 25 of the Company Act, 1956
- Co-operative Societies
- Social clubs
- Political parties
- Mutual funds specified under Section 10 Clause (23D) of the Income Tax Act
Wealth Tax Act in 1957
The Wealth Tax Act, 1957 oversees the process of taxation that is associated with the combined wealth of an Individual, a Hindu Undivided Family (HUF), or a Company possesses on the Valuation Date. Wealth Tax is not a part of the Income Tax Return and is a direct tax which is required to be filed separately at the end of a financial year.
The Wealth Tax Act, 1957 is divided into different chapters, each are explained below
Chapter with their own subsections.
- Section 1 : Short title, extent and commencement
- Section 2 : Definitions
Charge of Wealth-Tax and Assets subject to such Charge:
- 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
- Section 8 : Wealth-tax authorities and their jurisdiction
- Section 8A : Powers of Commissioner respecting specified areas, cases, persons, etc.
- Section 8AA : Concurrent jurisdiction of Inspecting Assistant Commissioner and Wealth-tax Officer
- Section 8B : Power to transfer cases
- Section 9 : Control of wealth-tax authorities
- Section 9A : Commissioners of Wealth-tax (Appeals)
- Section 10 : Instructions to subordinate authorities
- Section 10A : Directors of Inspection
- Section 11 : Jurisdiction of Assessing Officers and power to transfer cases
- Section 11A : Inspector of Wealth-tax
- Section 11AA : Commissioner competent to perform any function or functions
- Section 11B : Wealth-tax Officer competent to perform any function or functions
- Section 12 : Control of wealth-tax authorities
- Section 12A : Appointment of Valuation Officers
- Section 13 : Wealth-tax authorities to follow orders, etc., of the Board
- Section 13A : Powers of Director-General or Director, Chief Commissioner or Commissioner and Joint Commissioner to make enquiries
- Section 14 : Return of wealth
- Section 14A : Power of Board to dispense with furnishing documents, etc., with return of wealth.
- Section 14B : Filing of return in electronic form.
- Section 15 : Return after due date and amendment of return
- Section 15A : Return by whom to be signed
- Section 15B : Self-assessment
- Section 15C : Provisional assessment
- Section 16 : Assessment
- Section 16A : Reference to Valuation Officer
- Section 17 : Wealth escaping assessment
- Section 17A : Time limit for completion of assessment and reassessment
- Section 17B : Interest for defaults in furnishing return of net wealth
- Section 18 : Penalty for failure to furnish returns, to comply with notices and concealment of assets, etc.
- Section 18A : Penalty for failure to answer questions, sign statements, furnish information, allow inspection, etc.
- Section 18B : Power to reduce or waive penalty in certain cases
- Section 18BA : Power of Commissioner to grant immunity from penalty.
Special Provision For Avoiding Repetitive Appeals:
Section 18C : Procedure when assessee claims identical question of law is pending
before High Court or Supreme Court
Charge of Additional Wealth Tax in Certain Cases:
Section 18D : Additional wealth tax
Liability to Assessment in Special Cases:
- Section 19 : Tax of deceased person payable by legal representative
- Section 19A : Assessment in the case of executors
- Section 20 : Assessment after partition of a Hindu undivided family
- Section 20A : Assessment after partial partition of a Hindu undivided family
- Section 21 : Assessment when assets are held by courts of wards, administrators-general, etc.
- Section 21A : Assessment in cases of diversion of property, or of income from property,
- held under trust for public charitable or religious purposes
- Section 21AA : Assessment when assets are held by certain associations of persons
- Section 22 : Assessment of persons residing outside India
Settlement of Cases:
- Section 22A : Definitions
- Section 22B : Wealth-tax Settlement Commission
- Section 22BA : Jurisdiction and powers of Settlement Commission
- Section 22BB : Vice-Chairman to act as Chairman or to discharge his functions in certain circumstances
- Section 22BC : Power of Chairman to transfer cases from one Bench to another
- Section 22BD : Decision to be by majority
- Section 22C : Application for settlement of cases
- Section 22D : Procedure on receipt of an application under section 22C
- Section 22DD : Power of Settlement Commission to order provisional attachment to protect
- Section 22E : Power of Settlement Commission to reopen completed proceedings
- Section 22F : Powers and procedure of Settlement Commission
- Section 22G : Inspection, etc., of reports
- Section 22H : Powers of Settlement Commission to grant immunity from prosecution
- Section 22HA : Abatement of the proceeding before Settlement Commission
- Section 22HAA: Credit for tax paid in case of abatement of proceedings
- Section 22I : Order of settlement to be conclusive
- Section 22J : Recovery of sums due under order of settlement
- Section 22K : Bar on subsequent application for settlement
- Section 22L : Proceedings before the Settlement Commission to be judicial proceedings
- Section 22M : Certain persons who have filed appeals to the Appellate Tribunal entitled to
make applications to the Settlement Commission
Appeals, Revisions and References:
- Section 23 : Appeal to the Deputy Commissioner (Appeals) from orders of Assessing Officer
- Section 23A : Appealable orders before Commissioner (Appeals)
- Section 24 : Appeal to the Appellate Tribunal from orders of the Deputy Commissioner (Appeals)
- Section 25 : Powers of Commissioner to revise orders of subordinate authorities
- Section 26 : Appeal to the Appellate Tribunal from orders of enhancement by Chief Commissioners or Commissioners
- Section 27 : Reference to High Court
- Section 27A : Appeal to High Court
- Section 28 : Hearing by High Court
- Section 29 : Appeal to Supreme Court
- Section 29A : Tax to be paid notwithstanding reference, etc.
- Section 29B : Definition of High Court
Payment and Recovery of Wealth Tax:
- Section 30 : Notice of demand
- Section 31 : When tax, etc., payable and when assessee deemed in default
- Section 32 : Mode of recovery
- Section 33 : Liability of transferees of properties in certain cases
- Section 34 : Restrictions on registration of transfers of immovable property in certain cases
- Section 34A : Refunds
- Section 34AA : Appearance by registered valuers
- Section 34AB : Registration of valuers
- Section 34AC : Restrictions on practice as registered valuer
- Section 34ACC: Furnishing of particulars in certain cases
- Section 34AD : Removal from register of names of valuers and restoration
- Section 34AE : Existing registered valuers to apply afresh
- Section 34B : Transfers to defraud revenue to be void
- Section 34C : Provisional attachment to protect revenue in certain cases
- Section 35 : Rectification of mistakes
- Section 35A : Wilful attempt to evade tax, etc.
- Section 35B : Failure to furnish returns of net wealth
- Section 35C : Failure to produce accounts, records, etc.
- Section 35D : False statement in verification, etc., made under certain provisions of the Act
- Section 35E : False statement in verification mentioned in section 34AB
- Section 35EE : Failure to furnish particulars under section 34ACC
- Section 35EEE: Contravention of order made under second proviso to sub-section (1) or
- sub-section (3A) of section 37A
- Section 35F : Abetment of false return, etc.
- Section 35G : Punishment for second and subsequent offences
- Section 35GA : Power of Commissioner to grant immunity from prosecution.
- Section 35H : Offences by Hindu undivided families
- Section 35HA : Offences by companies
- Section 35I : Prosecutions to be with the previous sanction of certain wealth-tax
- authorities and their power to compound offences
- Section 35J : Certain offences to be non-cognizable
- Section 35K : Bar on prosecution and on inadmissibility of evidence in certain circumstances
- Section 35L : Jurisdiction of courts
- Section 35M : Section 360 of the Code of Criminal Procedure, 1973, and the Probation of Offenders Act, 1958, not to apply
- Section 35N : Presumption as to books of account, etc., in certain cases
- Section 35O : Presumption as to culpable mental state
- Section 36 : Proof of entries in records or documents
- Section 36A : Power to tender immunity from prosecution
- Section 37 : Power to take evidence on oath, etc.
- Section 37A : Power of search and seizure
- Section 37B : Power to requisition books of account, etc.
- Section 37C : Application of retained assets
- Section 38 : Information, returns and statements
- Section 38A : Powers of Valuation Officer, etc.
- Section 39 : Effect of transfer of authorities on pending proceedings
- Section 40 : Computation of periods of limitation
- Section 41 : Service of notice
- Section 42 : Notice deemed to be valid in certain circumstances.
- Section 42A : Publication of information respecting assessees
- Section 42B : Disclosure of information respecting assessees
- Section 42C : Return of wealth, etc., not to be invalid on certain grounds
- Section 42D : Presumption as to assets, books of account, etc.
- Section 43 : Bar of jurisdiction
- Section 44 : Appearance before wealth-tax authorities by authorised representatives
- Section 44A : Agreement for avoidance or relief of double taxation with respect to wealth-tax
- Section 44B : Countries with which no agreement exists
- Section 44C : Rounding off of net wealth
- Section 44D : Rounding off of tax, etc
- Section 45 : Act not to apply in certain cases
- Section 46 : Power to make rules
- Section 46A : Power to make exemption, etc., in relation to certain Union territories
- Section 47 : Power to remove difficulties
- Annex : Text of section 40 of the Finance Act, 1983
- Appendix : Certain remaining provisions of allied acts referred to in Wealth Tax Act
- Schedule i : Rates of Wealth Tax
- Schedule ii : Omitted by the Finance Act, 1992, with effect from 1-4-1993
- Schedule iii : Rules for determining the value of assets
Wealth Tax Act 2015
As of Feb 28th 2015, the Wealth Tax was abolished and replaced with an additional surcharge of 2% on entities with a taxable income of Rs 1 crore per annum. The levy of wealth tax under the Wealth-tax Act, 1957 will be eliminated with effect from the 1st April, 2016. This means that the return of wealth need not be filed for the Financial Year 2015-16
Wealth Tax Act 1957 Bare Act:
The Wealth Tax Act 1957 Bare Act is essentially an expression stating only what the act does and can do. It is almost exactly similar to the Wealth Tax Act 1957, with only certain subsections omitted in order to lay bare the act in its most basic form.
The subsections omitted are
- Schedule ii