The government plans to widen the scope of wealth tax in Budget 2011-12 to include several assets that escape the tax net as they are acquired through cash transactions.

Armed with a survey on ostentatious display of wealth, the government is collecting  information from sellers of expensive consumer items and the Annual Information Returns (AIR).

Introduced in 2004, AIR mandates banks and financial institutions to furnish information to the government about high-value accounts.

The government has conducted surveys and enquiries on architects, imported watch dealers, luxury sanitaryware vendors, imported car dealers and vendors of consumer goods such as plasma TV and refrigerators, an official said.

The route was adopted primarily to elicit information on cash transactions, sources said.

One of the major constraints was the absence of information about spending where cash was the dominant mode of payment.

The move to widen the scope of wealth tax is in line with the Direct Taxes Code Bill that was introduced in Parliament in August last year.

The Bill proposes to increase the existing exemption limit for chargeability of wealth tax to R1 crore from the existing limit of R30 lakh at the rate of 1%.

Definition of wealth will also change to include watches, trusts outside India, equity and preference shares among others.

Wealth tax is an anti- abuse measure in the integrated tax system. It ensures reporting of significant assets held by a tax payer said a senior government official requesting anonymity.

Finance minister Pranab Mukhkerjee discussed the proposal to widen the ambit of wealth tax in a recent a review meeting with the officials of the Central Board of Direct Taxes (CBDT).