Wealth tax revamp in first NDA Budget

New Delhi: Income tax is going to mean more than just what you earn and how much of that is exacted by the government of the day. On the taxman's radar now will be expensive wristwatches, costly works of art and even gold and bling items that have been inherited.

All will have to be mentioned in your income-tax return from now on. The National Democratic Alliance's first budget exercise, for the financial year 2014-15, is all set to widen the scope of assets to be included in 'net wealth'. The only breather in this new initiative is that such items that will now constitute wealth must be worth more than a threshold value of Rs 2 lakh. Canny investors won't be laughing on their way to the bank any more, either. An additional tax of 10 per cent is in the works if yearly earnings from dividends on mutual funds and equities are north of Rs 1 crore.

Property, and the income it can yield, are back on the radar too. The government is looking at a change in tax rules that govern income from property; this could make commercial renting out of property less attractive now. The under-consideration proposals highlight the new government's resolve to scoop up wealth tax, whether assets are physical and visible or not-so-visible. According to one source, the lack of information on where chunks of cash disappear has been a major constraint, and the government wants to sort out this blind spot on the taxman's scope.