Valuation Date: An Important Element Related To The Wealth Tax Act
4 March 2013
The Wealth Tax Act came into effect in the year 1957 and the latest amendment to the act was made through the Finance Act of 2011. Officially, the act is termed as the Wealth Tax Act, 1957 and rules and regulations laid down by this act govern the entire nation including the territory of Jammu and Kashmir as well as the Union Territories. The act applies to every individual, Hindu Undivided Family (HUF) and company that is part of the taxation process in India. The net wealth that any of these Assessees own is taken into consideration to calculate the Wealth Tax that the Assessee is required to pay. The tax is calculated at the rate of 1 per cent where the wealth of an Assessee is pegged in excess of Rs. 30 lakh.
As per the Wealth Tax Act, the entire calculation of the wealth tax that an Assessee owes is based on the valuation date thus making this date an important one. The valuation date is 31 March that immediately precedes the Assessment Year. Therefore, if one considers the Assessment Year to be from 1 April 2012 to 31 March 2013, the valuation date stands at 31 March 2012. The valuation date is highly important for a range of reasons including the fact that it forms the very foundation of the calculation of Wealth Tax.
The residential status of the Assessee is also determined keeping in mind the valuation date and so is the calculation for deciding the value of the asset. The wealth that an Assessee possesses at the very last moment of the valuation date is considered the value on which the Wealth Tax is eventually calculated. The importance of the valuation date is therefore quite high among the many components that frame the Wealth Tax Act.