Instructions for filing Wealth Tax Return (Form BB)

INSTRUCTIONS FOR FILLING UP RETURN OF NET WEALTH (FORM BB)
        (To be detached before filing the return in a paper form)
 
This form is to be filled up by all wealth-tax assessees [individual, Hindu Undivided Family (HUF) or company]. This form is applicable for assessment years 2014-15 and subsequent years.
These notes are meant to help you in filling up this return form. They are not a substitute for law. Notes are given only in respect of items that need some explaining.
 
GENERAL
 Every individual or HUF or company, whose net wealth exceeds the maximum amount which is not chargeable to wealth tax is obligated to furnish his return of net wealth.
 This is an annexure-less return and shall not be accompanied by a statement showing the computation of the tax payable on the basis of the return, or proof of the tax and interest paid, or any document or copy of any account or form of report of valuation by registered valuer required to be attached with the return of net wealth under any provisions of the Wealth-tax Act, 1957. In case return is filed in paper form, all such documents enclosed with the return will be detached and returned to the person filing the return.
 This return shall be furnished electronically under digital signature. However, for assessment year 2014-15, an individual or a Hindu Undivided Family to whom the provisions of section 44AB of the Income-tax Act, 1961 are not applicable may furnish this return in paper form. From the assessment year 2015-16 and subsequent assessment years, this return form shall be furnished by all assessees electronically under digital signature.

Wealth Tax Basic you should know

We also bring to you latest news from Tax in India. Below is the article published in one of the News Tabloid in India.

Wealth tax is a direct tax levied on individuals, HUFs and companies annually. It is charged at the rate of 1% of net wealth (the value of specified assets on the valuation date in excess of the value of the debt that the taxpayer owes on the said assets) of a person if it exceeds Rs 30 lakh. Wealth tax is applicable on an asset held by a taxpayer as on March 31. Hence, the assets sold during the year are not subject to wealth tax.

This tax is levied on the non-productive assets of a taxpayer. The intent of this law is to tax assets that do not generate any income. Broadly, house property, motor cars, jewellery, cash in hand subject to limits, urban land, yachts, boats and aircraft qualify as assets that are liable to wealth tax in India. The said assets, when used for commercial purposes, are excluded from the ambit of wealth tax. The tax is also not imposed on residential properties rented for at least 300 days in a year.

Chargeability to wealth tax depends on the nationality and the residential status (as defined under the Income-Tax Act, 1961) of a taxpayer. While Indian nationals qualifying as ‘resident and ordinarily resident’ are liable to pay wealth tax on their global net wealth, a ‘non-resident’ or ‘resident but not-ordinarily resident’ is liable to pay this tax only on assets located in India. In contrast, foreign nationals, irrespective of their residential status, are liable to wealth tax only on Indian assets.
The value of taxable assets for the purpose of wealth tax would be the value as on the valuation date (i.e., March 31 of a financial year). Further, such value of assets (except cash) would have to be determined in accordance with the valuation norms prescribed under the Wealth Tax Act, 1957.

The due date for filing the wealth tax return is the same as the due date for filing the I-T return. For individuals and HUFs, the due date is July 31 following the financial year for which this return is to be filed and, for companies, it is September 30 or November 30 (as the case may be). The return has to be filed manually in the prescribed form (Form BA).

The provisions of regular assessment that apply to income tax also apply to wealth tax. Simple interest at the rate of 1% per month is applicable for failure to pay wealth tax and/or furnishing the return on or before the due date.

There are penalty provisions in case of non-payment of taxes, concealment of wealth and failure to produce evidence in support of return, when required by the wealth tax authorities.
Practically, while the provisions under I-T laws are strictly enforced by the revenue authorities and penal proceedings are initiated for non-compliance, the same is not true of wealth tax enforcement. Wealth tax enforcement has not gained much importance by the revenue authorities. Consequently, its compliance has not got the desired attention of taxpayers.

Considering rising inflation, the Direct Taxes Code (DTC) proposes to increase the threshold limit for levy of wealth tax from Rs30 lakh to Rs 50 crore. Further, wealth tax rate is proposed to be slashed from 1% to 0.25%.

Though the DTC proposes to increase the ceiling limit for wealth tax, it also proposes to expand the ambit of wealth tax. The assets proposed to be covered would include both physical and financial assets and not limited to the current category of assets. While we all remain vigilant about our income tax liability, it is imperative that the same diligence is adopted for wealth tax compliance.
Divya Baweja
The writer is senior director, Deloitte in India. With inputs from Shailly Jain, manager, and Ajay Arora, assistant manager, Deloitte Haskins & Sells
The above article was published in The Hindu

Proposed levy on financial assets could hit capital formation

We also bring to you latest news from Tax in India. Below is the article published in one of the News Tabloid in India.

 



Finance minister P. Chidambaram’s proposal to levy wealth tax on financial assets of individuals and trusts above Rs50 crore is set to hit not just affluent investors but entrepreneurs too, say tax experts.

If one takes the example of Reliance Industries chairman Mukesh Ambani, the proposal could lead to an extra tax demand of Rs 86 crore a year on the 36 lakh shares he holds in the company. Internet entrepreneurs, whose companies may have fairly good market capitalisation but little revenue flow, may also find it hard to comply with the proposed wealth tax norm.

While official sources said the tax base of wealth tax has not been precisely quantified, rough estimates suggest the proposed 0.25% tax, if signed into law, could fetch a maximum of Rs 19,000 crore assuming the entire market capitalisation of financial assets accounting for 60% of the Rs 1,28,39952 crore GDP projected for 2014-15 is taxed. However, only those owning assets worth more than Rs 50 crore would come under the tax net, lowering estimates of receipts from this tax further.

Experts, therefore, worry whether changes in wealth tax would be worth the effort and warned that the move may lead to undesirable results. “Including financial assets within the scope of wealth tax will cause a lot of hardship to entrepreneurs who may not have the cash flow in the initial years to comply. This would adversely affect capital formation,” said Girish Vanvari, co-head, tax, KPMG in India.

The revised Direct Taxes Code released for public comments earlier this week raised the threshold for this levy from Rs 30 lakh to Rs 50 crore, lowered the rate to 0.25% from 1% now and excluded companies from the scope of this tax. The revised code proposes to tax financial assets in the hands of individuals, Hindu undivided families and private discretionary trusts. At present, companies are covered under wealth tax but they will not be under wealth tax ambit if the code is implemented.

“One has to leave aside the emotions of taxing the super-rich and dispassionately analyse the cost of wealth tax collection against the amount that could be garnered. I doubt whether such collections would help in reducing the fiscal deficit. This (proposed change) amounts to paying taxes on market value of assets when there is no cash flow. Does one expect taxpayers to sell the financial assets and pay wealth tax?” asked Sudhir Kapadia, partner & leader, business tax services, EY.

Levying wealth tax on the market value of a financial asset would mean paying tax on sentiment-driven valuations without actually benefiting from such valuation, which is possible only at the time of a sale.

But the finance ministry is of the view that the cost of acquisition of an asset may not be the right indicator of the value of an asset and, therefore, cannot be the basis for wealth tax.

The ministry was earlier of the view that wealth tax was just a means to collect information on assets, but subsequently changed the view that it is only one of the objectives. The tax department has been increasingly paying extra attention on assets of assessees to see if they correspond with their declared income as black money became a sensitive issue in the last few years.

“This concentrated effort to target the very rich was not part of the original DTC and it is a retrograde step,” said Neeru Ahuja, partner, Deloitte Haskins & Sells.

Gist of latest caselaws

Lease expenses : Where assessee purchased a running hotel business and vendor had to secure lease rights of premises from owner, expenditure incurred towards such tenancy right should be allowable as revenue expenditure - S.M. Dayanand v .Deputy Commissioner of Income-tax (2013) 40 taxmann.com 420 (Karnataka)

 

 

 

Proceedings in pursuance to notice issued under section 158BD giving less than 15 clear days time to assessee to file return for block period would be void ab initio only in a case where prejudice is shown to have been caused to assessee or where notice has not been served at all to assessee.Notice giving less than 15 days time to file block return: Proceedings in pursuance to notice issued under section 158BD giving less than 15 clear days time to assessee to file return for block period would be void ab initio only in a case where prejudice is shown to have been caused to assessee or where notice has not been served at all to assessee - Commissioner of Income-tax v. Joginder Singh (2013) 40 taxmann.com 429 (Punjab & Haryana)

 

 

 

Fees for Technical services : Irrespective of insertion of Explanations 5 & 6, with retro effect from 1-6-1976, where entire services of providing technical design and drawings were rendered by foreign company to Indian assessee outside India, same would not be chargeable to tax in India - New Bombay Park Hotel (P.) Ltd.v.ncome-tax Officer (International Taxation) TDS-4 (2014) 41 taxmann.com 36 (Mumbai - Trib.)

 

 

 

Liaison Office of a foreign company is taxable when such foreign company is registered with ROC - Brown & Sharpe Inc. v. Assistant/Deputy Commissioner of Income-tax (2014) 41 taxmann.com 345 (Delhi - Trib.)

 

 

TDS on ECB : Interest on external commercial borrowings (ECB) loan being exempted by CBDT under section 10(15)(iv)(c), no TDS liability would arise - Deputy Commissioner of Income-taxv.Essar Steel Ltd. (2013) 40 taxmann.com 537 (Mumbai - Trib.)

 

 

Pre-commencement production cost that was shown as capital work-in-progress, could not be denied as revenue expenditure after production started - Deputy Commissioner of Income-tax v.Essar Steel Ltd. (2013) 40 taxmann.com 537 (Mumbai - Trib.)

 

 

DEDUCTION - PROFITS AND GAINS FROM INDUSTRIAL UNDERTAKINGS OTHER THAN INFRASTRUCTURE DEVELOPMENT UNDERTAKINGS

Housing project : Where assessee engaged in business of construction, adopted project completion method which was one of recognized method of accounting, its claim for deduction under section 80-IB (10) could not be rejected merely on ground that it should have adopted percentage completion method of accounting - Commissioner of Income-tax v. Satadhar Enterprises (2013) 40 taxmann.com 327 (Gujarat) 

 

 

SEARCH AND SEIZURE

Validity of search : Where satisfaction with respect to search and seizure in assessee's case was entirely based on a document which neither bore assessee's name nor was it related to him, issue of warrant and subsequent search and seizure proceedings were liable to be quashed - Rajesh Rajora v. Union of India (2013) 40 taxmann.com 330 (Madhya Pradesh)

 

 

APPELLATE TRIBUNAL - APPEALABLE ORDERS

Condonation of delay : Where competent authority rejected assessee's application for grant of registration under section 12AA in absence of books of account and other details furnished by assessee and against impugned order assessee filed appeal before Tribunal late by 1804 days and sought condonation of delay, since assessee was not only negligent in filing appeal before Tribunal but also in pursuing its application before competent authority, there was no reasonable cause for delay - Hyderabad Urban Development Authority v. Assistant Commissioner of Income-tax (2013) 40 taxmann.com 354 (Hyderabad - Trib.) 

 

 

SERVICE TAX

CARGO HANDLING AGENCY SERVICES

Movement of goods in mining area cannot, prima facie, be regarded as Cargo Handling Services - Aravali Equip (P.) Ltd. v. Commissioner of Central Excise (2013) 40 taxmann.com 4 (New Delhi - CESTAT) 

 

 

PENALTY - NOT TO BE IMPOSED IN CERTAIN CASES

Though errors of omission/commission are clerical errors and they may not be deliberate, but, when they are huge, they must be picked up at time when tax return is signed and submitted; failure in that behalf would attract penalty, as such errors do not constitute 'reasonable excuse' - Powerscreen Equipment Ltd. v. Commissioners of Customs & Excise (2014) 41 taxmann.com 62 (UKV - DUTIES TRIBUNALS) 

 

 Source: Taxmann