In a recent development, the compliance norms for wealth tax
purposes in India have been amplified. Accordingly, overseas assets
of persons subject to Indian wealth tax, including:
immovable properties, including debt owed in relation
shares, bonds and debentures,
will be required to be mandatorily disclosed in the wealth tax
returns. It is important to note that wealth tax is a separate levy
from income tax in India and is charged at the rate of 1 percent of
the net wealth beyond Ł30,000 (INR 30 lakhs) in every
assessment year. Further, net wealth is separate from the concept
of current income, and it is possible that tax paid income
channelized into other assets like immovable property, etc. becomes
subsequently liable to a levy of wealth tax.
The Indian Income Tax Department is currently engaged in mapping
income tax returns against wealth tax returns to ensure consistency
of disclosure of assets. The penalties for non-compliance of wealth
tax norms range from an unlimited monetary penalty to seven
years' imprisonment, or both. Given the current investigations
into overseas "black money," a number of international
financial intermediaries like banks, trust companies and others,
have been brought under the investigative machinery to obtain
information under the risk of being proceeded against as wilful
It is vital to make an early assessment of the nationality and
residence status of individuals who have assets in India and
outside of it in excess of the above threshold. This could pave the
way for a cohesive strategy to ensure both compliance with
disclosure norms and arriving at the optimum level of wealth tax
payable. Further, individuals subject to the wealth tax net should
consider the timing of divesting assets to ensure the maximum
benefit is derived by way of optimizing wealth tax dues.
If you have any questions about the topics discussed in
this Alert, please contact Saionton Basu in Duane
Morris' London office, any of the attorneys in our India
Practice Group or the attorney in the firm with whom you are
regularly in contact.
Disclaimer:This Alert has been
prepared and published for informational purposes only and is not
offered, nor should be construed, as legal advice. For more
information, please see the firm's
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Maltese tax law provides for rules which grant beneficiaries referred to as ‘Highly Qualified Persons' to be taxed at a reduced rate of tax of 15% on their employment income, provided certain conditions are satisfied.
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