TAX CONSULTING

Introduction: Assessee means a person by whom the wealth tax or any other sum of money is payable under the provisions
of the Act, and includes the legal representative , executor or administrator of a deceased person and a person deemed to
be an agent of a non resident.Under the Act tax is charged on the following persons in respect of the wealth held by them
during the assessment year:

Individual
Hindu Undivided Family
Company

Chargeability: Chargeability of tax also depends upon the residential status of the assessee,the Citizenship of a person. In
order to be a citizen of India,a person must have domicile in the territories of India and must fulfil any of the following
conditions:

He must have been born in Indial
Either of his parents must have been born in India
Before the formation of Republic i.e. 26th January 1950, he has been ordinarily resident in India, for a period of 5 years

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Citizenship: A person ceases to be a citizen of India, if he voluntarily acquires the citizenship of a foreign nation. The
incidence of tax has been explained below with a example found over the net:

INCIDENCE OF TAX:-
Citizen of India:

If he is "resident & ordinarily resident", his assets and debts located anywhere
in the world are chargeable to tax.
In any other case only the assets and debts located in India are chargeable to
tax.

Non-citizen: In this case all his assets and debts located in India are taxable,irrespective of whether he is a resident, a non-
resident, or not ordinarily a resident.The value of all assets and debts located outside India are exempt here.

Wealth tax is chargeable only on the following assets:-
Any guest house, residential house, commercial property, urban farm house.However an exception is provided in this clause
regarding the following:

a residential house allotted by a company to an employee, officer or director, drawing annual salary of less than Rs. 200000.
a residential or a commercial house forming part of stock in trade.
commercial house used in own business of the assessee.

The implication of this clause is that while wealth tax is chargeable on house properties , it is exempt in respect of the exceptions provided:

Motor car for personal use.
Jewellery.
Yachts, boats, and air-crafts used for non-business purposes.
Urban land, subject to the conditions specified.
Cash in hand exceeding Rs. 50000.

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Conclusion: The value of all the taxable assets on the valuation date is clubbed together and is reduced by the amount of
debt owed by the assessee. The net wealth so arrived at is charged to tax at the rates specified. The present rate of tax
is 1% of the amount by which the net wealth exceeds Rs. 1500000. The rate is same for individuals, HUF's and companies.
Special rules have been laid down in the Act regarding valuation of various assets like immovable properties, shares,
jewellery etc.

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