In a bid to counter tax evasion, the Finance Ministry is contemplating making it mandatory for individuals and Hindu Undivided Families (HUFs) to report Indian assets and liabilities in income-tax (I-T) return forms.
“The government is considering to introduce a new income tax return form that will require individuals to disclose all their assets and liabilities, rather than just annual income from various sources,” a senior finance ministry official said.
The official further said that the decision will be taken in the next two days.
Last year, reporting of assets and liabilities was made mandatory for individuals with foreign assets.
The official said the intention is mainly to get information about those High Networth Individuals ( HNIs) who have not been declaring all their assets to avoid paying wealth tax.
In the financial year 2012-13, wealth tax collections stood at Rs 866 crore — much lower than the Budget estimate of Rs 1,244 crore.
For 2013-14, the Finance Ministry has set a collection target of Rs 950 crore.
In the Union Budget, the government levied a surcharge of 10 per cent on annual taxable income above Rs 1 crore and imposed tax deducted at source on transfer of immovable property costing more than Rs 50 lakh.
At present, wealth tax is charged at 1 per cent of the value of assets exceeding Rs 30 lakh and does not include one residential property and financial assets.
I completely agree with Mr Rugram. This is opening a pandora’s box for corruption and litigation. It is another method to harrass the tax paying people of the country. Please let the Govt collect the shortfall from those in public life who have wealth greater than their known sources of income.
Why not start with all govt officials – they and their family members should be regularly audited for wealth more than known sources of income.
Also the wealth of all politicians should revert to the Treasury after their demise because ‘they want to do good for the people’ in life and so they should be allowed to do so in death also.
which form is used to file wealth tax return and it is necessary to file it annualy or when property value above 30lacs to be sold in year?
reply pl.
thank u,
Dear Mr. Devashish,
No, your father is not liable to tax under Wealth Tax Act, 1957. One house is exempt under the W.T. Act. Even if you have 2 houses, one house as per your choice shall be exempt. Net wealth upto Rs.30 Lacs is exempt.
Fully agree with Rugram’s comments. If needed separate return for assets with minimum value
can be started.
Good Idea. Many litigation and problem for genuine Income tax assesses will be solved.
But I request one more change from the Income tax authorities.
I have an opportunity to read an Investigation notice sent by an Investigating officer of Income tax to one of the tax payer requiring production and submission of certain records. I presume the notice is in the prescribed template approved by the Board / concern ministry.
With due respect, I write to submit that, in my opinion, the language being used in such notices is derogatory. I am upset with the text of the notice, particularly to the sentence “not to depart until you receive my permission to do so” which suggests as the notice is being sent to a known criminal and not to a respectable income tax payer. I can’t stop myself from comparing the language with one being used by IRS in US, which is in sharp contrast to one being used here in India. In US whenever a return is picked up for Audit, a notice is being sent to the tax payer, clearly defining the questions, giving details of documents and paper required to be produce by the tax payer. They even give the Name and contact details of investigation officer and allow tax payer to fix an appointment, suitable to him/her for the visit of Officer.
I am of the opinion, that the tax authorities and the tax payers should have complete faith in each other and the same must be reflected in all words and deeds. May I request, the Top tax officials, to please consider making the language of such notices some what respectable. I believe it will be a small step in insuring better compliance by tax payers in India.
This is a retrograde step. A similar provision was thought of some years ago but was not implemented due to practical difficulties (which are still there). All tax payers, even if they be HNIs, are not good at keeping perfect records like accountants and so it is not possible for them to report all assets and liabilities every year in their returns. These details are required more for wealth tax returns and not for income tax returns.
The move now contemplated is surely bound to cause confusion and make people lose sleep over the need to not only prepare an initial list of assets/liabilities but also to maintain a continuous record all their lives.
If the present system has loopholes by which HNIs hide their true income (in their I-T Returns), how does one ensure that the HNIs report full information of all assets and liabilities?
The details of assets/liabilities reported is also going to be a rich source of information for lower level staff of the I-T Dept. who handle the papers, and may even tempt them to disclose the details to unscrupulous persons for a price, to enable the latter to extort money from the people. Additionally, there are great chances of harassment of assessees who may be asked to explain even minor changes in their assets/liabilities, thus increasing the level of corruption in the I-T Dept.
In my view, this proposal deserves to be shot down at the initial stage itself. I hope the Government has the sense to drop the measure.
One month has already passed after the end of the last FY and there is still no sign of the I-T Return forms. What a shame! Would the Govt. be kind enough to extend the last date for submission of the Return forms by at least one month, irrespective of whether any additional information is to be called for or not?
No, your father is not liable to pay wealth tax.
one residential house is exempt under wealth tax Act. if it is not more than 500 sq mtrs.
Dear Devashish
One Residential Property is exempt from Wealth Tax. Accordingly, the resident building built by your father, who owns no other asset, is exempt from chargability under Wealth Tax. It is irrespective of the value of such property, may it be in crores.
My Father aged about 68 year he was purchase plot in 1976 and built resident building in 1977 1978 at present value of this assets is near 1 crore. No any other asset purchase by him. In this case my father is liable for Wealth Tax or not