WealthTax

Definitions

2. In this Act, unless the context otherwise requires,—

1. “Appellate Tribunal” means the Appellate Tribunal constituted under section 252 of the Income-tax Act ;
2. “assessee” means a person by whom wealth-tax or any other sum of money is payable under this Act
3. “assessment year” means a period of twelve months commencing on the 1st day of April, every year ;
4. “”assets” includes property of every description, movable or immovable
5. “Board” means the[Central Board of Direct Taxes constituted under the Central Boards of Revenue Act, 1963 (54 of 1963)] ;
6. “company” shall have the meaning assigned to it in clause (17) of section 2 of the Income-tax Act

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Charge of wealth-tax

3. (1) [Subject to the other provisions contained in this Act], there shall be charged for every [assessment year] commencing on and from the first day of April, 1957 [but before the first day of April, 1993], a tax (hereinafter referred to as wealth-tax) in respect of the net wealth on the corresponding valuation date of every individual, Hindu undivided family and company at the rate or rates specified in [Schedule I].
(2) Subject to the other provisions contained in this Act, there shall be charged for every assessment year commencing on and from the 1st day of April, 1993, [but before the 1st day of April, 2016], wealth-tax in respect of the net wealth on the corresponding valuation date of every individual, Hindu undivided family and company, at the rate of one per cent of the amount by which the net wealth exceeds fifteen lakh rupees:
[Provided that in the case of every assessment year commencing on and from the 1st day of April, 2010, the provisions of this section shall have effect as if for the words “fifteen lakh rupees”, the words “thirty lakh rupees” had been substituted.]

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Net wealth to include certain assets

4. In computing the net wealth—

1. by the spouse of such individual to whom such assets have been transferred by the individual, directly or indirectly, otherwise than for adequate consideration or in connection with an agreement to live apart, or
2. by a minor child, not being [a minor child suffering from any disability of the nature specified in section 80U of the Income-tax Act or] a married daughter, of such individual, or
3. by a person or association of persons to whom such assets have been transferred by the individual [directly or indirectly] otherwise than for adequate consideration for the immediate or deferred benefit of the individual, his or her spouse, or
4. by a person or association of persons to whom such assets have been transferred by the individual otherwise than under an irrevocable transfer
5. by a person or association of persons to whom such assets have been transferred by the individual, directly or indirectly, on or after the 1st day of June, 1973, otherwise than for adequate consideration for the immediate or deferred benefit of the son’s wife, of such individual or both,

whether the assets referred to in any of the sub-clauses aforesaid are held in the form in which they were transferred
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Exemptions in respect of certain assets.

1. Wealth-tax shall not be payable by an assessee in respect of the following assets], and such assets shall not be included in the net wealth of the assessee—
   1. any property held by him under trust or other legal obligation for any public purpose of a charitable or religious nature in India :
      [Provided that nothing contained in this clause shall apply to any property forming part of any business, not being a business referred to in clause (a) or clause (b) of sub-section (4A) of section 11 of the Income-tax Act in respect of which separate books of account are maintained or a business carried on by an institution, fund or trust referred to in  clause (23B) or clause (23C) of section 10 of that Act;]
   2. the interest of the assessee in the coparcenary property of any Hindu undivided family of which he is a member ;
   3. any one building in the occupation of a Ruler, being a building which immediately before the commencement of the Constitution (Twenty-sixth Amendment) Act, 1971, was his official residence by virtue of a declaration by the Central Government] under paragraph 13 of the Merged States (Taxation Concessions) Order, 1949, or paragraph 15 of the Part B States (Taxation Concessions) Order, 1950;
2. jewellery in the possession of any Ruler, not being his personal property, which has been recognised before the commencement of this Act, by the Central Government as his heirloom or, where no such recognition exists, which the Board may, subject to any rules that may be made by the Central Government in this behalf, recognise as his heirloom at the time of his first assessment to wealth-tax under this Act :
   1. that the jewellery shall be permanently kept in India and shall not be removed outside India except for a purpose and period approved by the Board ;
   2. that reasonable steps shall be taken for keeping the jewellery substantially in its original shape ;
   3. that reasonable facilities shall be allowed to any officer of Government authorised by the Board in this behalf to examine the jewellery as and when necessary ; and
   4. that if any of the conditions hereinbefore specified is not being duly fulfilled, the Board may, for reasons to be recorded in writing, withdraw the recognition retrospectively with effect from the date of commencement of clause (b) of section 5 of the Rulers of Indian States (Abolition of Privileges) Act, 1972, and in such a case, wealth-tax shall become payable by the Ruler for all the assessment years after such commencement for which the jewellery was exempted on account of the recognition.

Explanation —For the purposes of clause (iv) of the foregoing proviso, the fair market value of any jewellery on the date of the withdrawal of the recognition in respect thereof shall be deemed to be the fair market value of such jewellery on each successive valuation date relevant for the assessment years referred to in the said proviso :
Provided further that the aggregate amount of wealth-tax payable in respect of any jewellery under clause (iv) of the foregoing proviso for all the assessment years referred to therein shall not in any case exceed fifty per cent of its fair market value on the valuation date relevant for the assessment year in which recognition was withdrawn;
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Exclusion of assets and debts outside India.

6. In computing the net wealth of an individual [who is not a citizen of India or of an individual] or a Hindu undivided family not resident in India or resident but not ordinarily resident in India, or of a company not resident in India during the year ending on the valuation date—

1. the value of the assets and debts located outside India ; and
2. the value of the assets in India represented by any loans or debts owing to the assessee in any case where the interest, if any, payable on such loans or debts is not to be included in the total income of the assessee under[section 10] of the Income-tax Act ;

shall not be taken into account.
Explanation 1.—An individual or a Hindu undivided family shall be deemed to be not resident in India or resident but not ordinarily resident in India during the year ending on the valuation date if in respect of that year the individual or the Hindu undivided family, as the case may be, is not resident in India or resident but not ordinarily resident in India within the meaning of the Income-tax Act.
Explanation 1A.—Where in the case of an individual the value of an asset in India is represented by any debt owing to him, being any moneys to his credit in a Non-resident (External) Account, the interest payable on which is not to be included in his total income under [sub-clause (ii) of clause (4)] of section 10 of the Income-tax Act, the provisions of this section shall, in relation to such asset, apply subject to the modification that the reference in this section to an individual not resident in India shall be construed as a reference to a person resident outside India as defined in clause (q) of section 2 of the Foreign Exchange Regulation Act, 1973 (46 of 1973).

Explanation 2.—A company shall be deemed to be resident in India during the year ending on the valuation date, if—

1. it is a company formed and registered under the Companies Act, 1956 (1 of 1956), or is an existing company within the meaning of that Act ; or
2. during that year the control and management of its affairs is situated wholly in India.

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Value of assets, how to be determined.

7. (1) Subject to the provisions of sub-section (2), the value of any asset, other than cash, for the purposes of this Act shall be its value as on the valuation date determined in the manner laid down in Schedule III.

(2) The value of a house belonging to the assessee and exclusively used by him for residential purposes throughout the period of twelve months immediately preceding the valuation date, may, at the option of the assessee, be taken to be the value determined in the manner laid down in Schedule III as on the valuation date next following the date on which he became the owner of the house or the valuation date relevant to the assessment year commencing on the 1st day of April, 1971, whichever valuation date is later :
[Omitted by the Finance Act, 1992, w.e.f. 1-4-1993.]

Explanation.—For the purposes of this sub-section,—

1. where the house has been constructed by the assessee, he shall be deemed to have become the owner thereof on the date on which the construction of such house was completed ;
2. “house” includes a part of a house being an independent residential unit.

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Wealth-tax authorities and their jurisdiction.

8. The income-tax authorities specified in section 116 of the Income-tax Act shall be the wealth-tax authorities for the purposes of this Act and every such authority shall exercise the powers and perform the functions of a wealth-tax authority under this Act in respect of any individual, Hindu undivided family or company, and for this purpose his jurisdiction under this Act shall be the same as he has under the Income-tax Act by virtue of orders or directions issued under section 120 of that Act (including orders or directions assigning concurrent jurisdiction) or under any other provision of that Act.

Explanation.—For the purposes of this section, the wealth-tax authority having jurisdiction in relation to a person who is not an assessee within the meaning of the Income-tax Act shall be the wealth-tax authority having jurisdiction in respect of the area in which that person resides.

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Powers of Commissioner respecting specified areas, cases, persons, etc.

8A. [Omitted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.]

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