We have all heard the
saying “Desire Is A Well That Never
Dries Up”. Wealth is a relative term. It can never be measured. It is never
enough .Don’t we all feel that how much
ever we have we are not satisfied? Where is that security and feeling of heavenly
bliss that money alone can buy? India is a nation which strives to produce
millionaires. More the merrier is our
motto. Ours is a nation which aspires to be one of the Dollar Billionaires’. We have about 50 people in our country with a
Net worth of about 4500 crores. We have about 2 Lakh Dollar Millionaires in our country. Crème De La Crème…. Remember A
Golden Key Can Open Any Door….
The rich are
taxed the world over. Remember the Cyprus case in which the rich were taxed,
mainly a tax imposed on their bank deposits in order to fund the nation’s
bailout package. Can our nation be far
behind? Aren’t our neo rich unhappy with the 10% surcharge imposed on their earnings? I would like to remind all of you that the
team of Financial Planners at IndianMoney.com are always
there for you to plan your Taxation needs in a most efficient manner. You can
explore this unique Free Advisory Service just by giving a missed call at 02261816111.
So What Is Wealth Tax….Here
we have wealth taxation in India known as the wealth tax act 1957.It is a direct annual tax levied on the
ownership of certain assets by individuals and HUF even though these assets may
not generate any income. Pensioners, The retired, senior citizens no one has
been spared by this tax. This tax needs to be filed by July 31st of the assessment year. Remember always pay
your wealth tax on time as the late payment of wealth tax attracts a penalty of 1% of interest per month for
each month of delay. Do not even try to evade your wealth tax as a heavy
penalty of five times the tax amount due may be imposed.
So How
Much Is the Wealth Tax Charged …This is
basically an amount of 1% on net
wealth above and over 30 Lakhs. Let us consider the net wealth to be 75 Lakhs.
Then we have the difference of 75 Lakhs over and above 30 Lakhs. This
translates to be 45 Lakhs charged at 1 % .An amount of INR 45000 is charged as wealth tax.
On
What Is The Wealth Tax Charged….
·
Commercial Buildings and nearby land.
·
Jewelry, Bullion, Articles made
totally or partly of Gold, Platinum, Silver or an alloy of these metals.
·
Residential Buildings and nearby
land
·
Yachts, Aircraft and Boats.
·
Guest Houses and the nearby land.
·
Urban land located within a local
authorities jurisdiction and has at least 10000 people as per the last census conducted
before the valuation date. An area within 8
Kms of a local authority like the Central Government.
·
A farm house located within 25 Kms
of the local limits of a cantonment board or a municipality.
·
Cash in hand in excess of INR
50000.
·
Precious metals including those in
the form of utensils and furniture.
According
to the Wealth Tax Act 1957 the following are regarded as deemed
assets and wealth tax is charged:
·
Assets transferred between Spouses
·
Assets owned by minors, unless
specially-abled child owns any asset it will not be grouped with the parent’s
net income.
·
Assets provided to son’s wife or to
another person or group of individuals for the benefit of son’s wife.
·
Assets that have been transferred
to an individual or a group of people. This transfer must benefit the providers
or their spouses in either the short or the long term.
On What Is Wealth Tax Exempt?
·
A residential property that has
been allocated to a full time employee by either the Company, Director, or an Officer with a
gross yearly salary lesser than 5 Lakh Rupees.
·
A commercial or a residential real
estate property that is part of stock –in – process.
·
Commercial or real estate property
used for official or business purposes.
·
A Commercial Complex or an Establishment.
·
A residential property that has
been put on hire for a minimum of 300 days in the immediate earlier
year.
·
A land where construction is
illegal.
·
A land where the building has been
set up with approval from proper authorities.
·
An unused land owned for industrial
purposes. This land should remain unused for 2 years after acquisition.
·
The land that has been owned by an
assessee for 5 years as stock-in-trade.
·
Religious or charitable property
owned by a trust or a legal entity.
·
Jewelry owned by erstwhile rulers
·
Residential Property owned by
former rulers.
Advantages Of Imposing Of
Wealth Tax On The Rich:
·
April Showers Bring Out May Flowers: Revenues
for healthcare, defence and education must come from somewhere. Ours is a
nation with ballooning costs in healthcare and medical treatment. With a rising
population, food security for the needy and an excellent public distribution
system is necessary. Building of Infrastructure and Bridges is necessary for
the growth of the nation.
·
Big Fish Eat Little Fish: The
rich already have enough wealth and taxing them should be no problem.
·
Everybody Wants To Go To Heaven But Nobody Wants To Die: The rich may not approve of
this but the nation’s ballooning current account deficit and fiscal deficit has
to be controlled
.
·
Fair Exchange Is No Robbery: The
taxes collected from the rich are redistributed among the poor.
Disadvantages Of Imposing
Wealth Tax On The Rich:
·
Tax increases have a negative
effect on the economy as they lead to spending cuts which slows growth.
·
Inflation may rise and high wealth
tax on the rich might indirectly affect the middle class.
·
Taxing of the rich transfers money
from the private sector to the public sector where it might not be efficiently
spent or may land in the hands of greedy politicians for their campaigns.
·
Here we have seen how many rich individuals
in USA and France have left their nation and reside in other countries. Rich
HNI Indians would do the same and this might affect the progress of the nation.
Here I would like to end
this article by giving my readers a thought provoking message. We know
that wealth alone is not enough to satisfy our needs and there is something
extra which we must all do in order to provide that inner gratification .Here
we look at Corporate Social Responsibility and Philanthropy. Here we need to look
no further than Mr Azim Premji who donated a 12 % stake in his company Wipro
valued at $ 2.2 Billion towards education focused Azim Premji
Foundation. Mrs Nita Ambani wife of Mr Mukesh Ambani owner of the
Petrochemical giant Reliance Industries runs a nonprofit organization
for the education and healthcare of the poor and under privileged in India. She
is also a part of Reliance and UNAIDS Partnership which is aimed towards
halting and reversing the spread of the HIV Epidemic in India. Here we know
that Imitation Is The Sincerest Form Of Flattery and if we can, we must
imitate these great individuals. We can read up IndianMoney.com for our
Taxation needs.
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