Various taxation laws are enacted for tax collection from the public for revenue and welfare of the country. The Wealth Tax was enacted in the year 1957 for the assessment of tax from the wealth of an individual, Hindu undivided family and any company at 1% where the net wealth in an assessment year exceeds fifteen lakhs. The Hindu undivided family follows or governed by the Mitakshara law is strictly subject to the wealth tax act. A significant feature of the wealth tax is even though the act put forth assessment of wealth tax from individual a strict definition regarding an individual is not specified in the act. For achieving the purpose of the act an individual is deemed as a normal or natural persons or human beings. The Wealth Tax Act 1957 also specifies certain category that is construed as individuals including a Hindu Deity, mutawali of Wakf as juristic individual, trustees, joint heirs, joint donees and joint purchasers, a Muslim undivided family and holder of impartible estate. Any registered trade unions are not considered as individuals. Partnership firms are also exempted from wealth tax but the partners or members of the firm are individually liable for their share in the property of the firm or the association.
The valuation date is meant for assessing the amount or the tax levied on the net wealth of a particular person on a particular date. The determination of valuation date is important as per the act as it is the tax base for the levy of wealth tax. In case of a holder of an impartible estate where through special custom or law he holds the property or estate that equally belongs to other members of the family. The assets are specified in the act for the computation of wealth tax. It includes any building or land, residential building, guest house, farm house within 25 kilometers from the local limits of a local authority. Commercial establishments or complexes or incomplete or unfinished buildings are not deemed as assets for the net valuation. Property comes under trust, property vested in God, property used for charitable purpose including poor relief fund, educational or medical relief, any property used for the general public utility or benefits are exempted from the wealth tax.
The valuation of the assets is done as per the provisions of section 7 and rules on schedule 3 and any rule made under this act. The valuation of immovable property on land and building is assessed according to rule three to eight as per third schedule part B of the act. Valuation of business assets are specified in Third schedule part D Rule 14.
Valuation of interest in firm or association of persons can be valued according to third schedule Part E Rules 15 and 16. Valuation on life interest is done according to Schedule 3 Part F, Rule 17. Valuation of other assets is valued as per third schedule, part H, Rules 20 and 21. for assessing the net wealth the details of the returns by the assessee should be made in prescribed form , Form BA on or before the due date.
The act specifies for penalties for evasion of wealth tax. The concealment of the assets or inaccurate furnishing of details regarding returns is liable to penalty of a total of 100 % or 500% of the amount tax that was deliberately concealed or evaded. Any offence committed by any person under this act is liable to be prosecuted. Any person who is aggrieved by the decision of commissioner can prefer appeal before the Appellate Tribunal.
The Wealth Tax Act concentrates on the assessment of tax on every assets incurred by an individual providing every aspects for the convenient evaluation on assets incurred by all individuals or other category specified in the Act.