Yoga guru Baba Ramdev, at the centre of an ugly spat with the Union government over corruption and Indias black money fuelled economy, may soon have to cough up huge wealth tax on his overseas assets once the direct taxes code (DTC) comes into force. Should that happen the swami would find himself in the privileged company of prominent Indian nationals who own private assets abroad.

The baba, who runs a multi-million dollar global fitness enterprise and flies a private jet, also owns an island off the coast of Scotland, those in the know in the finance ministry told Financial Chronicle. The proposed DTC suggests that the aggregate value of assets owned by Indian nationals abroad will be taken into account for computation of wealth tax.

Former finance minister Yashwant Sinha leads the parliamentary standing committee for finance which, right now, is vetting the DTC bill introduced by finance minister Pranab Mukherjee. One per cent tax will be levied on the net value of assets held by Indian individuals abroad.

The net value of overseas assets will be computed on the basis of aggregate value on the valuation date minus all debts of the person abroad. If a person has net assets of Rs 5,000 crore abroad, he will have to pay Rs 50 crore as wealth tax.

Section 113 of the DTC bill states that Indian nationals owning any building, land, farm house, motor car, yacht, boat, helicopter and private jets, jewellery, bullion, furniture, utensils made of gold, silver, platinum and other precious metals, archaeological collections, drawings, paintings, sculptures and cash in hand over Rs 2 lakh, bank deposits, equity or preference shares in foreign companies and an interest in foreign trusts abroad will attract wealth tax.

The DTC provisions say that wealth tax will be applicable if the aggregate net assets abroad held by any Indian exceed Rs 1 crore. Baba Ramdev began an indefinite fast demanding reforms, including death penalty for corrupt officials, in an anti-graft campaign that has undermined embattled prime minister Manmohan Singh. The campaign was broken up by police on the midnight of Saturday.

The swami has also demanded demonetisation of Rs 1,000 and Rs 500 currency notes as a measure to curb black money. The government has, however, ruled out demonetisation saying it is virtually impossible to implement. If these currency notes were to be demonetised, Indian government would have to print many times more currency notes of small denominations for which the mints do not have the capacity. Enough quantity of security paper and ink is also not available immediately, a government official said.

The chairman of the prime ministers economic advisory council, C Rangarajan, who was the RBI governor in the 1990s, said demonetisation of Rs 1,000 and Rs 500 currency notes was very arduous to administer, implying it was not a practical suggestion.