Five smart things to know about wealth tax

1) Wealth tax is an annual direct tax imposed on the net wealth of individuals and HUFs with reference to the preceding financial year or the current assessment year.

2) Net wealth is calculated as the aggregate value of all chargeable assets on the valuation date, minus the outstanding debt on these assets.

3) Financial assets, one residential property, as well as cars, property and other assets used for commercial or business purposes are exempt from wealth tax. Any property rented for at least 300 days in a year also doesn’t attract wealth tax.

4) The taxable assets for wealth tax include real estate and land other than a house, precious metals, including jewellery and bullion, motor cars, urban land and cash more than Rs 50,000.

5) Wealth tax is charged at 1% on the amount that exceeds Rs 30 lakh of the net wealth of the assessee on valuation date, which is 31 March of a financial year.

6) For resident Indians, wealth tax is payable on all taxable assets in India or abroad. For NRIs, wealth tax is applicable only on the assets that are in India.

The content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Sunita Abraham, Girija Gadre and Arti Bhargava.