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Property and wealth tax




Under the Wealth Tax Act, wealth tax is charged for every assessment year in respect of the net wealth on corresponding valuation date for every individual , HUF and company. Wealth tax is charged at the rate of one percent of the amount by which the net wealth exceeds Rs 15 lakhs. Net wealth includes assets owned by the assessee.

Properties owned by an assessee considered for computation of wealth tax:

Any building or land appurtenant to it: This includes any type of house. The house may be used for residential or commercial purposes, for the purpose of maintaining a guest house or any other purpose . It also includes a farm house situated within 25 km from the local limits of any municipality.

Urban land: This means land situated in any area which is comprised within the jurisdiction of a municipality or a cantonment board and which has a population of more than 10,000 according to the last preceding census. It also includes land situated in any area within a distance of eight kilometres from the local limits of any municipality or cantonment board. This should be notified by the Central Government in the Official Gazette.

It is to be noted that all residential houses and properties are not included for the purpose of computation of wealth tax. Some are exempt from wealth tax. These include :

One house or part of a house or a plot of land belonging to an individual or a Hindu Undivided Family. The house may be self-occupied or let out. In case the house is owned by more than one person, exemption is available to each co-owners of the house.

Any building owned or occupied by a cultivator, or receiver of rent. The building should be in the immediate vicinity of the land, and it should be a building which the cultivator or receiver of rent requires as a dwelling house.

An asset, being a plot of land comprising an area of upto 500 square metres.

Any house for residential or commercial purposes which forms part of stockin-trade .

Any residential property that has been let-out for a minimum period of 300 days in the previous year.

Any property in the nature of commercial establishments or complexes.

A house meant exclusively for residential purposes and which is allotted by a company to an employee having a gross annual salary of less than Rs 5 lakhs.

Any house which an assessee may occupy for the purposes of any business or profession carried on by him.

In addition to these, the following are also not treated as an asset and hence not included for the computation of wealth tax:

Any unused land held by the assessee for industrial purposes for a period of two years from the date of its acquisition by him.

Any land held by an assessee as stock-in-trade for a period of 10 years from the date of its acquisition by him.

Land occupied by any building which has been constructed with the approval of the appropriate authority .

Land on which construction of a building is not permissible under any law for the time being in force in the area in which such land is situated.
By vayaM CS