Unearthing black money: Wealth tax on foreign deposits?

New Delhi: Deposits in banks located outside the country may attract wealth tax, as part of government’s drive to unearth black money, the Finance Ministry has said. The proposal is part of the Direct Taxes Code (DTC) bill which is being scrutinised by a Parliamentary panel. “For the purpose of levy of wealth tax, taxable assets have been defined to include deposits in banks located outside India in case of individual, unreported bank deposits in case of others…,” the ministry said, adding this is one of “specific new measures for unearthing black money”. [caption id=“attachment_220163” align=“alignleft” width=“380” caption=“The Bill, introduced in the Lok Sabha in August 2010, proposes to overhaul the over 50 years old Income Tax Act.”]  [/caption] The DTC also proposes a “reporting requirement … making it obligatory on the part of resident assessees to furnish details of their investment and interest in any entity outside India,” the document said. Besides, an assessee’s interest in a foreign trust or a company is also proposed to be made taxable assets under the new tax regime, it said. The Bill proposes to impose a wealth tax of 1 percent on the net assets exceeding Rs 1 crore. The government is hoping for approval of the measure by Parliament in the next fiscal. Pending Parliamentary nod, some of the provisions may be included in the budget to be presented on March 16. The Bill, introduced in the Lok Sabha in August 2010, proposes to overhaul the over 50 years old Income Tax Act. At present, wealth tax contributes a meager amount to the government kitty. For the current fiscal, the only Rs 635 crore is targeted from this source out of the total tax revenue of Rs 9.32 lakh crore. The assets which would be included for computing the wealth tax liability will include car, yatch, helicopter, aircraft, jewellery, bullion, archaeological collections, paintings, sculptures, watch having value of over Rs 50,000 and cash in excess of Rs 2 lakh.This would be in addition to accounts held by residents in foreign banks and stakes in foreign companies. As regards the real estate, the DTC makes it clear that wealth tax will not be levied on residential houses, commercial premises and those immovable property which had been rented out for a minimum of 300 days in a financial year. The value of other properties, including urban land and farm houses located within 25 kilometers of any municipal or Cantonment Board, will be included while computing the wealth tax liability. The wealth tax, the DTC said, will not be levied on land property and bullion of former rulers. PTI