Wealth Tax Exemptions



Wealth Tax Exemptions

Non-resident Indian

“Non-resident Indian” means an individual, being a citizen of India or a  person of Indian origin who is not a “resident”.

Explanation – A person shall be deemed to be of Indian origin if he, or either of his parents or any of his grand-parents, was born in undivided India;

In case of NRIs having any of the following assets, the same are not taxable in the hands of NRI Under

01.

One house property or part of a house property,

02.

One plot of  land  provided area is less than 500 square meters or less.

In Case of NRIs, being a person of Indian origin or a citizen of India who was ordinarily residing in a foreign country and who, on leaving such country, has returned to India for permanent residence, the following assets are not taxable in the hands of NRI for seven successive assessment year commencing with the assessment year next following the date on which such person returned to India:

01.

Money and the value of the assets brought by him into India

02.

Value of the assets acquired by him out of such money within one year immediately preceding the date of his return and at any time thereafter

03.

Money standing to the credit of NRE A/c in any bank in India.

Example -

X an Indian citizen has been residing in USA for several years, returned to India on 21.10.2009 with an intension of permanently residing here. Discuss his wealth-tax liability in the following cases:

1.

He brought Rs.25,00,000 along with him and purchased a Mercedez Car.

2.

He had sent Rs.40,00,000 to India on 5.11.2008. This money was utilised for purchase of gold on 28.11.2008.

3.

He sent Rs.20,00,000 on 5.08.2008 and purchased a residential plot of land in Delhi on 16.08.2008.

4.

On his return he brought with him diamond jewellery worth Rs.22,00,000.

5.

He had sent Rs.31,00,000 on 04.11.2008 which was deposited in his Non-Resident Indian account with a Bank. Out of this Rs.20,00,000 was withdrawn from the Bank for purchase of urban land but he could not purchase the same till 31.03.2010.

1.

Although car is an asset but in his case it will be exempt for 7 years.

2.

In this case, the value of gold as on 31.03.2009 will be included in his net wealth for assessment year 2009-10, but from assessment year 2010-11 to 2016-17 it will be exempt u/s 5(v).

3.

In this case the value of land will be included in his net wealth not only for assessment year 2009-10 but also for subsequent years. No exemption is available as the asset was purchased more than 1 year prior to the date of return.

4.

This shall be exempt for 7 assessment years commencing from assessment year 2010-11.

5.

On 31.03.2010 he holds more than Rs.50,000 in cash, but the same will be exempt as cash is also an asset and the exemption u/s 5(v) is also available for 7 years.

In addition to the above, OVERSEAS ASSETS held by NRI is also exempt Under

 

Similarly debt owed in respect of such asset, whether located in India or outside India are not deductible.

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