Wealth tax liability should not be avoided. If you ignore wealth tax liability then you have to pay penalty up to 500% of the amount of tax which is avoided.
Every individual or Hindu Undivided Family (HUF) who has wealth exceeding Rs 30 Lakhs is required to pay wealth tax and file a return of wealth tax with the revenue authorities by 31 July, immediately following the end of financial year. Presently the rate of wealth tax is 1% and date of filing varies for the persons who has to get their accounts audited.
Wealth tax is payable on net assets,i.e. assets less any liability such as loans relating to such assets. It is applicable on assets such as building, motor car, jewellery, urban land, bullion, yachts, boats, aircraft and cash in hand exceeding Rs 50000. But productive assets such as mutual funds, fixed deposits, etc. are not included.
An Indian national who qualifies as a resident and ordinarily resident is liable to pay tax on his global assets. In case of others, Indian national is subject to wealth tax only on wealth in India.
Under the Proposed Direct Tax Code ( DTC ), the limit for levy of wealth tax has been proposed to be raised from Rs 30 lakh to Rs 1 crore and additional assets are also proposed to be covered under the purview of wealth tax.
Government is taking measures to track data related to expenditure, investments and foreign assets, which will make it simpler for the authorities to correlate and track non-compliance.
You can follow the following steps:
* Prepare a list of all assets and investments owned by the family.
* Classify the assets based on legal ownership, assets purchased by own funds, gifts and inheritance.
* Compare the assets based listing with the definition of assets under the wealth tax Act.
Once you have the data ready, compute your wealth tax liability and also examine the various exemptions available under the wealth tax provisions.
You may consider taking professional help to understand the liability under the wealth tax Act.