The Direct Taxes Code proposes to substantially raise the threshold limit for levy of wealth tax to Rs 50 crore from Rs 30 lakh, a suggestion, if accepted, would save many people from paying tax on their wealth. Finance Minister Pranab Mukherjee in the budget for 2009-10 had doubled the threshold limit for levy of wealth tax to Rs 30 lakh.Proposal related to wealth Tax in Direct Tax code
- Provisions in relation to the Wealth Tax are proposed to be applicable to every individual, Hindu Undivided Family and Private Discretionary Trust;
- The Companies are proposed to be taken out of the Wealth Tax net;
- The DTC has proposed to enhance the basic exemption under the wealth tax form Rs. 30 Lakhs to Rs. 50 crores. However, at the same time all the assets (including financial assets, productive assets, business assets, etc.) will be liable to Wealth Tax;
- Rate of Wealth tax is proposed to be reduced from 1% to 0.25%. That means the tax on the net wealth is proposed to be 0.25% of the amount by which the net wealth exceeds Rs. 50 crores;
- The term “assets” for the purpose of Wealth Tax is not separately defined under the DTC. Further, under the generic definition of the term ‘assets’ provided in DTC, all types of business as well as investment assets are covered. However, at present the wealth tax is not leviable on the agricultural land, business assets (such as motor car, yachts, etc.) and productive assets.