Wealth tax for returning Indians

Wealth tax, in India, is levied under the Wealth-tax Act, 1957. NRIs are liable to pay tax for their wealth in India alone. Foreign wealth is entirely exempt from tax.

Wealth tax is payable on the aggregate value of chargeable assets as reduced by the value of debts owed on valuation date. The valuation date is uniformly fixed at 31st March.

The following assets are subjected to wealth tax:

1. Guesthouse, farm-house, commercial complex, shopping mall and residential complex are subjected to the wealth tax.
2. Valuable items like jewelry and any items made up of precious metals like gold, silver, platinum or any other precious metals.
3. Aircrafts, yachts, boats that is used for non-commercial purpose
4. Cash in hand that is more than 50,000.
5. Any cash that is not recorded on the account log book is subjected to the wealth tax.
6. Motor car that is owned by an individual.
7. Any urban land situated in the jurisdiction where there is a total population of ten thousand as per last census is subjected to the wealth tax.

The wealth tax is 1% currently on the aggregate value of the assets as on valuation date in excess of Rs. 15 lakhs.

It may be noted here that productive assets like shares, debentures, bank deposits and investments in mutual funds are exempt from wealth tax.

A returning Indian or a person of Indian origin (PIO), who wishes to settle permanently in India, is eligible for exemption from wealth tax in respect of the following assets

• Moneys brought by him into India;
• Value of assets brought by him into India,
• Moneys standing to his credit in a NRE Account with a bank in India as on the date of his return to India; and
• Value of assets acquired by him out of moneys brought by him into India or sale of assets brought by him into India within one year prior to the date of his return.

This exemption for NRIs is available for a period of seven successive assessment years after his return.