Do I have to pay wealth tax?

What is wealth tax? Is it to be paid annually for owning property, jewellery, shares, a car? Or, is it to be paid when one buys any of them or inherits them?

- Bhaskar G N

The question is a bit ambiguous and hence it is not possible to give an accurate answer. So, we will try to briefly and broadly answer this query.

Some assets are considered as wealth:

- Residential house
- Motor car
- Jewellery
- Yatch / boat
- Aircraft
- Urban land
- Cash-on-hand

Out of the above list, some are exempted:

- Residential house: one sole house, house held as stock-in-trade, house owned for business/profession, let-out property.

- Motor car: Used for running on hire, held as stock-in-trade.

- Jewellery: Held as stock-in-trade, gold deposit bonds.

- Cash-on-hand: In excess of Rs 50,000

The rate of tax:

If your net wealth exceeds Rs 15,00,000, it is taxable @ 1%.

However, please note that there are other nuances that have to be considered.

• Will I be fined for not filing returns?

If I work as a consultant, what is the tax I would have to pay? Just 5%?

- Navin P

As you are working as a consultant, the person responsible for paying the fees to you is supposed to deduct the tax at source, referred to as TDS.

The rate is dependent on the nature of services being rendered by you.

If we make an assumption that you are liable for 5.1% TDS and the fees payable to you are Rs 1,00,000, then TDS would be Rs 5,100.

Now this does not mean that your tax liability is Rs 5,100. In order to get a clear picture of your tax liability, you would need to prepare a Income & Expenditure account. Then you can calculate the earnings you have made from your profession and the expenses incurred and accordingly estimate the tax liability on this profit.

• Is PF included under Section 80C?

What is the different between PF and PPF?

- Sheila Menon

The Provident Fund facility is generally provided by an employer to his employee. A percentage of salary is deducted as Provident Fund and, generally, the employer contributes as much as the employee contributes into the fund.

The Public Provident Fund is a government run fund where the entire contribution is voluntarily made by the individual himself. The maximum that can be invested is Rs 70,000 per annum and it is for a period of 15 years.