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Wealth Tax Interview Questions & Answers - Learning Mode
COOLINTERVIEW.COM TAX INTERVIEW QUESTIONS WEALTH TAX INTERVIEW QUESTIONS QUESTIONS & ANSWERS - LEARNING MODE

Wealth Tax Interview Questions & Answers - Learning Mode

Wealth tax is a direct tax, which is charged on the net wealth of the assessee. Wealth tax is chargeable in respect of Net wealth corresponding to Valuation date.Net wealth means all assets less loans taken to acquire those assets. Wealth tax is 1% on net wealth exceeding 30 Lakhs (Rs 3,000,000). So if you have more money, assets you are liable to pay tax. Note:- Wealth tax is abolished by government in budget 2015.Now onwards surcharge of 12% is applicable on individual earning 1 crore and above. Wealth Tax is a tax based on the market value of assets that are owned. These assets include, but are not limited to, cash, bank deposits, shares, fixed assets, private cars, assessed value of real property, pension plans, money funds, owner occupied housing and trusts. A wealth tax (also called a capital tax, equity tax, or net worth tax) is a levy on the total value of personal assets, including owner-occupied housing; cash, bank deposits, money funds, and savings in insurance and

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Wealth Tax Interview Questions & Answers - Learning Mode
Try Wealth Tax Interview Questions & Answers - Exam Mode
Question: What is Wealth Tax?

Answer: The tax levied by the government on a person?s personal net wealth or capital is called wealth tax. Net wealth is the net value of a person?s assets. The Wealth Tax Act 1957 lays down the rules governing wealth tax in India. It applies to three kinds of assessees viz. Individuals, HUFs and companies. Personal assets refer to an assessee?s land (urban), house, car, boats and yachts, aircraft, precious metals in various forms like jewellery, furniture etc. and cash (hand). Source: CoolInterview.com
Question: What has replaced Wealth Tax and will it make super rich pay more or less?

Answer: Wealth tax will be replaced with a levy of additional 2 % surcharge. The surcharge would be applicable to the following:-

Individuals
Hindu Undivided Families
Firms
Cooperative societies
Local authorities with income exceeding Rs. 1 crore.

The central government has proposed an increase of surcharge by 2% to 12% on the super-rich individuals earning an annual income of Rs. 1 crore and above in addition to firms with an annual income of Rs. 10 crore o Source: CoolInterview.com
Question: What was the main reason cited by the finance minister to abolish the wealth tax?

Answer: According to the finance minister, wealth tax had high collection costs but a low yield. However, experts suggest a variety of reasons behind the move including streamlining of data, reining in black money and minimizing tax evasion among others. Source: CoolInterview.com
Question: How much wealth tax was collected in the last fiscal?

Answer: The central government collected a meagre Rs.1,008 crore in the financial year 2013-14. Wealth tax has not showed any significant growth over the past few years, according to experts. Source: CoolInterview.com
Question: What is the fine for not/late filing of wealth tax returns?

Answer: Where the assessee had defaulted in timely furnishing of his return of wealth, then penal interest @ 1% for every month or part of a month of delay is chargeable for Non/Late filing of return. Source: CoolInterview.com
Question: What are the Wealth Tax Exemptions/Limits?

Answer: Wealth Tax Exemptions/Limits:-

Assets not covered are:-

Investment securities viz. shares, bonds, units of mutual funds, units of gold deposit schemes
Houses/plots of area below 500 sq. Mts.
Houses as place of business/profession
Residential properties rented out for 300 days or more in a year
Vehicles for hire
Stock-in-trade business assets Source: CoolInterview.com
Question: What is the significance of Wealth Tax?

Answer: Given that India reportedly has around 800 million people in poverty, wealth tax has been a politically sensitive subject and therefore, often figures in the pro-poor and pro-industry narrative in the country. Many political parties have, in the past, demanded wealth tax rates to be raised to 3% to reportedly make several urban and rural crorepatis pay more taxes. Also, according to experts, wealth tax holds special significance in today?s India, what with the growing number of billionaires in t Source: CoolInterview.com
Question: Where should taxpayers furnish all the particulars which were hitherto submitted in wealth tax returns?

Answer: Wealth held including all details about assets will be listed in the income tax returns. Income Tax authorities will administer the proposed law. Source: CoolInterview.com
Question: Who is liable to file wealth tax returns?

Answer: Every Individual, Hindu Undivided Family and Company whose net wealth exceeds the maximum amount which is not chargeable to wealth tax in any previous year ending of 31st March is liable to file the wealth tax return. The maximum limit of net wealth not chargeable to tax under the provisions of the Wealth tax Act, 1957 is Rs. 15 lakhs at present. Source: CoolInterview.com
Question: Under Wealth Tax, what is Net Wealth?

Answer: Net Wealth is the aggregate value, computed under the provisions of the W.T. Act, 1957, of all assets (including deemed assets), belonging to the assessee on the valuation date, Minus the aggregate value of all debts owed by the assessee on the valuation date which have been taken in relation to the assets attracting wealth tax. Source: CoolInterview.com
Question: How is Surcharge & Net Taxable Income Calculated?

Answer: To calculate the net taxable income, taxpayers should deduct their investments and expenditure which qualify for income tax deduction from their total gross income.

Example:

Akhil Sharma, a 36-year-old businessman, has a gross total income of Rs. 1.1crore. He invests Rs. 1.5 lakh in equity-linked savings scheme and public provident fund, which is tax deductible as per section 80C. Akhil also has a home loan, for which he pays Rs. 2 lakh p.a as interest, which is also eligible for t Source: CoolInterview.com
Question: What was Wealth Tax rate?

Answer: Wealth tax was calculated at 1% on net wealth above Rs.30 lakhs. E.g. If you your net wealth for the year was Rs.50 lakhs, wealth tax would be charged at 1% on Rs.20 lakhs i.e (Rs.50 lakhs - Rs.30 lakhs). Amount payable = Rs.20,000. Source: CoolInterview.com
Question: Why has Wealth Tax been abolished?

Answer: Some of the main objectives cited by experts behind the move include the following:-

Focus on more governance and less government: Finance minister, during his budget speech, cited the lack of ease of doing business as one of the reasons for abolishing the wealth tax. Also, by abolishing wealth tax, government has reduced the scope of some taxpayers taking undue advantage of the loopholes in the wealth tax act.
Simplification of tax procedures: According to experts, Indian tax Source: CoolInterview.com
Question: What is the effect of Residential Status of an Individual on Wealth Tax?

Answer: The residential status of an individual was one of the key parameters to ascertain wealth tax liability. Resident Indians were liable to pay wealth tax on their global assets. However, non-resident Indians and foreigners were liable to pay wealth tax on their assets in India only. If a non-resident Indian returns to India, his assets would not be exempt from wealth tax. Assets acquired by NRIs within one year of their return are also exempt. Source: CoolInterview.com
Question: What are the assets which were covered under wealth Tax?

Answer: Assets which were covered under wealth tax:-

Wealth tax was payable on assets such as real estate and gold. Assets such as shares, mutual funds and securities termed as ?productive assets?, were exempt from wealth tax.
Yachts, aircraft and boats came under the purview of wealth tax.
While one residential home is exempt, more than one own house would come under the purview of wealth tax. However, wealth tax is not applicable on a property if it is used for business or ren Source: CoolInterview.com
Question: Can resident taxpayers hold assets within or outside India sans disclosures as a result of abolition of wealth tax?

Answer: No. While there will be no wealth tax levy, taxpayers must make the required disclosures. Source: CoolInterview.com
Question: How Wealth Tax was calculated?

Answer: Wealth tax was calculated on the market value of all the assets owned, irrespective of whether they yielded any returns or not. All individuals and Hindu Undivided Family with net wealth above Rs. 30 lakh were required to pay wealth tax. Wealth tax was based on the valuation of assets as on March 31 and would, therefore, be applicable on any assets acquired at the end of a financial year. However, assets sold during the year would not come under the purview of wealth tax. Significantly, some Dou Source: CoolInterview.com
Question: What is Wealth Tax in India?

Answer: Introduced in late 1950s, with the aim to reduce inequalities in India, wealth tax is a form of direct tax, charged on the net wealth of super rich individuals, Hindu Undivided Families and companies. Wealth tax is a levy of tax on the net wealth (the aggregate value of assets minus the aggregate value of debts or liabilities as on the valuation date) of super rich individuals/HUF/companies at the end of a fiscal year. Wealth tax was essentially aimed at taxing the super-rich taxpayers who both Source: CoolInterview.com
Question: What is the impact of abolishing Wealth Tax, on Super-Rich Taxpayers?

Answer: As a result of the proposed abolishment of the wealth tax, taxpayers will re-examine their portfolios in that most may consider investing in land in urban areas among other assets which had hitherto come under the purview of wealth tax. As per the new proposal by the finance minister, if you hold more than one plot in an urban area, you don?t have to pay wealth tax and should pay only capital gains tax upon sale. Also, at the time of the sale, you can reduce your liability by investing in a resi Source: CoolInterview.com
Question: What are the due dates for filing of wealth tax returns?

Answer: The due dates for filing Wealth Tax returns by different assessees, are the same as that for filing Income Tax returns. Source: CoolInterview.com

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