I have only recently come to know that the limit for Wealth Tax is net assets of Rs 30 lakhs. Call it my ignorance, or poor guidance and advise from my CA, I now find that I should have been filing my Wealth Tax returns for the past couple of years, which has not been done. I now have 2 questions - (1), if I wish to rectify this situation, what needs to be done by me, and (2) while computing the tax payable, assets like property, jewellery, car etc are to be valued at acquisition cost or market value - if market value is the basis, what would be the source of information for items like property?
Well it is a good thing that you noticed it before the I. T. authorities did. I suggest the following:
(i) Pay up the due taxes and interest. Then file the returns for all the years. Some years may be within the time limit. Some may be beyond.
(ii) Where the returns are beyond time, write a letter to the AO pointing out that you have voluntarily file the ROIs and that he should regularize it by issuing appropriate notices u/s 17 of the W. T. Act.
(iii) As you have voluntarily disclosed the wealth, paid taxes and interest, your bona fides will be established & you will be spared of penalty & prosecution. For the motor car, you can take the insurance value. The jewellery can be got valued by a valuer.
(iv) On the point of valuation, you can go by the "ready reckoner" and sale instances in and around your locality. If you feel that these are high, get a valuation report from a Govt. approved valuer who will identify the deficiencies in your property and value it accordingly.
Thank you very much Mr Majumdar for your very clear and precise advise. Will do accordingly. One other question - Of two houses owned, one (of lower market valuation) is self-occupied and the other (of higher valuation) has been given on rent. For purposes of computing the tax payable and filing the return, should it be on the basis of the actual reality, or can any of the houses be considered as self-occupied and exempt? If this option is there, can this also be changed from year to year depending upon what is beneficial? Is this desirable or can it lead to other complications? greatly appreciate your views.
If you have let out the house for a minimum period three hundred days in the previous year, then you need not include the same in the net wealth [section 2(ea)(i)(4)]. You can also claim exemption for the self occupied house.
Thank you Mr Natarajan...however my question was different... the property was on rental for less than 300 days and hence WT would obviously be applicable. But my question was more about whether any property can be shown as self-occupied irrespective of the reality, and if yes, then can this be changed from year to year at the option of the assessee?
Quote from: bk542 on March 18, 2012, 09:42:45 PM
Thank you Mr Natarajan...however my question was different... the property was on rental for less than 300 days and hence WT would obviously be applicable. But my question was more about whether any property can be shown as self-occupied irrespective of the reality, and if yes, then can this be changed from year to year at the option of the assessee?
I'll look up the provisions and revert. Don't have access to the WT Act at the moment.