The Finance Ministry is busy drafting the new Direct Tax Code which would be tabled in the winter session of Parliament. The new Code would make it mandatory to pay Wealth tax alongwith Income tax. There would be a combined form for payment of both taxes together.
Wealth tax is levied on individual, HUF and company@ 1% on net wealth in excess of Rs.15 lacs. The assets which constitute wealth for the purpose of wealth tax are residential or commercial building, farm house within 25 kms from the local limits of any municipality, motor cars, jewellery, bullion, yachts, boats, aircrafts, urban land and cash in hand in excess of Rs.50,000.
It is felt that the real estate boom would give impetus to the trend of owning more immovable properties, thereby making the owner liable for wealth tax.
The government’s move to interlink wealth tax with income tax would make wealth tax evasion difficult since till now this tax has been a little of neglected kind. It would also streamline the process of tax collection by cutting down costs.