sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Latest Expert Exchange
Direct Tax »
 Three reasons to file income tax returns on time
  New direct tax code may have to wait until 2019
 Direct tax collection grows fastest in 7 years in FY18, courtesy GST; here’s how indirect tax reform helps
 Income Tax: Deadline for filing belated ITR of Assessment Year 17-18 is over
 Income Tax department cautions TDS deductors, says file statements by May 31 or pay penalty
 ITR-4 launched on e-filing portal; total 3 ITRs available now
 CBDT directs income tax department to hold grievance redressal fortnight for taxpayers in June
 Income tax return form-2 in Java format released for e-filing for FY2017-18
 3 ITRs available now ITR-4 launched on e-filing portal
 Businesses, small taxpayers to gain from new direct tax code
 New direct tax code to benefit corporates, income tax payers

Why it is important to pay wealth tax and file the return
July, 02nd 2012

The din generated by income tax returns tends to push the other taxes into the background. The wealth tax is the neglected child of the direct taxes family.

However, remember that ignoring wealth tax can lead to serious problems for a taxpayer, with the penalty ranging from 100% to 500% of the unpaid tax. "In extreme cases of willful default, a taxpayer may be punished with imprisonment ranging from six months to seven years," says Sunil Jain, partner of Gurgaon-based law firm J Sagar Associates.

Wealth tax raked in only Rs 787 crore for the exchequer in 2011-12, which was a piffling 0.16% of the total direct tax kitty of Rs 4,93,912 crore. The securities transaction tax brings in seven times as much revenue as the wealth tax. "The government is not paying too much attention to wealth tax because the collection is very low," says Amarpal S Chadha, tax partner, Ernst & Young.

This laxity on the part of the government has encouraged taxpayers to ignore their wealth tax liability. According to the Wealth Report 2012 of the Boston Consulting Group, India's rich are becoming richer. Nearly 28,000 Indian households crossed the threshold to become dollar millionaires (financial investments of over Rs 5.5 crore) in 2011.

Though financial assets do not invite wealth tax, real estate and gold, two favourite investment options of the super rich, are included. In the past 4-5 years, crores of rupees of HNI money has flowed into real estate, while gold prices have more than doubled in the past three years.

However, this is not reflected in the wealth tax collection, which has grown at a tardy pace, to say the least ( see char t) . However, this could soon change. A committee headed by former CBDT chairman, MC Joshi, has sought stricter punishment for tax evasion. The panel wants the minimum imprisonment for income tax and wealth tax evasion to be three years.

Most investors in real estate have no idea about the tax implication of buying a second property. A second house won't attract wealth tax only if it is rented out for at least 300 days in a year.

It can be a double whammy for the owner if the house is lying vacant, for he will not only have to pay tax on the notional rental income, but the value of the house will be added to his net taxable wealth. This is why savvy investors prefer to put money in commercial real estate, which does not attract wealth tax.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Desktop Application Development Outsourcing Desktop Application Development Offshore Desk

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions