Are you looking to return back home?

Watch out for the clause in Wealth Tax Act, highlighted in the new budget 2012

Wealth tax: A quick summary
All resident Indians are required to pay wealth tax and file a wealth tax return if their net wealth from assets exceeds Rs 30 lakh. ‘Assets’ in this case include land, property, jewellery, cars, aircrafts, yachts and cash in excess of Rs 50,000. For Resident Indians (Resident Ordinary Residents – ROR), wealth tax is payable on all these assets, irrespective of whether they are located in India or abroad.
For Non Resident Indians (NRIs), wealth tax is payable only on those assets that are located in India.

The new clause
A new clause has been added to section 17 of the Wealth Tax Act. This section deals with ‘wealth escaping assessment.’ Under this section, if a taxpayer fails to disclose certain assets and pay wealth tax on those assets, the assessing officer has the right to open the taxpayer’s returns for the last 4 years. In addition, if this net wealth that has escaped assessment is likely to be more than Rs 10 lakh, the assessing officer has the right to open returns for the last 6 years.
The intention of the new proviso is to bring to book all those tax evaders with significant assets in offshore locations or global tax havens.

Grey area
But this clause has a shade of grey. According to this clause, asset includes financial interest in any entity. That is, it could include shareholding in foreign entities. However, this inclusion of financial interest appears only in this clause. The main definition of ‘asset’ as defined in the Wealth Tax Act does not seem to be amended to include financial interest. One can only wait for clarity on this aspect.

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