Wealth Tax Manual - PakSearch.com

3. Charge of wealth-tax.-Subject to the other provisions contained in this Act, there shall be charged for every financial year commencing on and from the first day of July, 1963, a tax (hereinafter referred to as wealth-tax) in respect of the net wealth or assets on the corresponding valuation date of every individual, Hindu undivided family, firm ,association of persons or body of individuals, whether incorporated or not, and company at the rate or rates specified in the Schedule[:]

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3A. Tax on undisclosed assets.-- (1) Notwithstanding anything contained in this Act, where any person has not, for any year or years, declared any assets chargeable to tax under this Act or has declared the value of any asset lower than the value determinable under the provisions of the Act, such person may declare such asset or the value of the asset in accordance with the provisions of the scheme to be made by the Central Board of Revenue.

(2) Subject to the sub-section (3), the tax on the value of assets declared under sub-section (1) shall be charged at the rate of seven and one half per cent of the value of the assets.

(3) No tax under this Act (including this section) shall be payable in respect of the value of the assets declared under this section in respect of which income tax has been paid in accordance with the provisions of section 59D of the Income Tax Ordinance, 1979 (XXXI of 1979).

(4) Subject to sub-sections (5) and (6), where any assets are declared in accordance with the scheme made under sub-section (1), the person declaring such assets shall not be subjected to any additional tax, penalty, penal action or prosecution for any year for and upto the assessment year 1997-98.

(5) Nothing contained in this section shall apply to any person in whose case assets have been discovered as a result of or in respect of which proceedings have been initiated by way of Government investigation/inquiry.

(6) The amnesty provided in sub-section (4) shall be available on the following conditions, namely:--
(i) that the return of assets including the undisclosed assets for and upto the assessment year 1997-98 is filed as specified in section 14;
(ii) that the full and correct declaration of assets is made in the return;
(iii) that the basis of valuation of assets and the payment of tax shall be as follows:--

Residential properties
- Plots and open lands	Equal to the value specified by the District Collector for the purposes of Stamp Duty as on June 30, 1997
- Super structure	At the rate of Rs 300 per square foot.
- Apartments/flats	As registered for the purposes of Stamp Duty
Commercial properties -Plots and open lands	Equal to the auction value or the value specified by the District Collector for the purposes of Stamp Duty as on June 30, 1997, whichever is higher.
- Super structure	At the rate of Rs 300 per square foot.
- Share/stocks of listed Companies (including NIT units)	Price quoted at the stock exchange on June 12, 1997.
Shares/stocks of companies not quoted on recognised stock exchange.	The face value or break-up value whichever is higher on June 30, 1997.
Investment in Government schemes (i.e. NDSC, Postal Certificates, Bond, Government, Securities, etc.)	Value as on June 30, 1997.
Cash and Prize Bonds.	The face value.
Motor vehicles	(a) Imported motor vehicles.-- C.I.F. value plus the amount of all charges, customs duty, sales tax, levies, octroi, fees and other duties and taxes leviable thereon and the costs incurred till their registration. (b) Motor vehicles purchased from a manufacturer or assembler or dealer in Pakistan.-- The price paid by the purchaser, including the amount of all charges, customs duty, sales tax and other taxes, levies, octroi, fees and all other duties and taxes leviable thereon and the costs incurred till their registration. (c) Motor vehicles specified in clauses (a) and (b) on the valuation date following the valuation dates in which the vehicle was first assessable in the hands of the assessee.-- The value computed in the manner specified in the clause (a) or clause (b), as the case may be, as reduced by a sum equal to 10% of the said value for each successive year, upto a maximum of five years. (d) Used motor vehicles purchased by an assessee locally.-- The original cost of the vehicle determined in the manner specified in clause (a) or clause (b), as the case may be, as reduced by an amount equal to 10% for every year following the year in which it was imported or purchased from a manufacturer; Provided that in no case shall the value be determined at an amount less than fifty per cent of the value determined in the aforesaid manner.
Other assets.	As per provisions under this Act.

Payment of tax
The wealth tax payable on the undisclosed wealth declared by any person under the scheme made under sub-section (1) shall be paid by the declarant before furnishing the return and the return shall be accompanied by proof thereof.

3B. Charge of surcharges.-In a addition to the wealth tax charged for any year there shall be charged, levied and paid for any year a surcharge at the rate or rates specified in Part III of the First Schedule.

4. Net wealth to include certain assets.--(1) In computing the net wealth of an individual, there shall be included, as belonging to him,-
(a) the value of assets which on the valuation date are held-

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(iii) by a person or association of persons to whom such assets have been transferred by the individual otherwise than for adequate consideration for the benefit of the individual or his wife or minor child, or

(iv) by a person or association of persons to whom such assets have been transferred by the individual otherwise than under an irrevocable transfer,
whether the assets referred to in any of the sub-clauses aforesaid are held in the form in which they were transferred or otherwise;

(b) where the assessee is a partner in a firm or a member of an association of persons, the value of his interest in the firm or association determined in the prescribed manner.

(2) In making any rules with reference to the valuation of the interest referred to in clause (b) of sub-section (1), the Board shall have regard to the law for the time being in force relating to the manner in which accounts are to be settled between partners of a firm and members of an association on the dissolution of a firm or association, as the case may be.

(3) Where the value of any assets is to be included in the net wealth of an assessee in accordance with clause (a) of sub-section (1), there shall be deducted from such value any debts owing on the valuation date by the transferee mentioned in that sub-section in so far as such debts are referable to the assets.

(4) Nothing contained in clause (a) of sub-section (1) shall apply to any such transfer as is referred to therein made by an individual before the first day of July, 1962, and the value of any assets so transferred shall not be included in the computation of his net wealth.

(5) The value of any assets transferred otherwise than under an irrevocable transfer shall be liable to be included in computing the net wealth of the transferor.

Explanation.- For the purposes of this section the expression "transfer" includes any disposition, trust, covenant, agreement or arrangement.

5. Exemptions.-- (1) The assets or classes of asset, or person or classes of persons specified in the Second Schedule shall be-
(a) exempt from tax under this Act subject to the conditions and to the extent specified therein; or
(b) liable to tax at such rates, which are less than the races specified in the First Schedule, as are specified therein; or
(c) allowed a reduction in tax liability, subject to the conditions and to the extent specified therein; or
(d) exempt from, the operation of any provision of this Act., subject the conditions and to the extent specified therein.

(2) the Federal Government may, from time to time, by notification in the official Gazette, make such amendment in the Second Schedule by--
(a) adding any clause or condition therein;
(b) omitting any clause or condition therein; and
(c) making any change in any clause or condition therein,

as it may think fit, and all such amendments shall have effect in respect of any such year beginning on any date before or after the commencement of the financial year in which the said notification is issued:

Provided that the Federal Government shall place before the National Assembly all amendments made by it in the Second Schedule during a financial year.

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6. Exclusion of assets and debts outside Pakistan.-- In computing the net wealth of an individual or a Hindu undivided family not resident in Pakistan [ ] [ ] during the year ending on the valuation date--
(i) the value of the assets and debts located outside Pakistan; and
(ii) the value of the assets in Pakistan represented by any loans or debts owing to the assessee in any case where the interest, if any, payable on such loans or debts is exempt from tax under a notification issued under sub-section (1) of section 60 of the Income-Tax Act , 1922, or under the Second Schedule to the Income Tax Ordinance, 1979, shall not be taken into account.

Explanation 1.-- An individual or a Hindu undivided family shall be deemed to be not resident in Pakistan or resident but not ordinarily resident in Pakistan during the year ending on the valuation date if in respect of that year the individual or the Hindu undivided family, as the case may be, is not resident in Pakistan or resident but not ordinarily resident in Pakistan within the meaning of the Income-Tax Act.

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7. Value of assets how to be determined.-- (1) The value of any asset, other than cash, for the purposes of this Act, shall be estimated by the Deputy Commissioner in accordance with the rules made under section 46 of the Act.

(2) Notwithstanding anything contained in sub-section (1)-

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(aa) Where the assessee is owner of agricultural land, its value shall be determined in the following manner, namely:-
(i) The value of agricultural land shall, in terms of rupees per acre, be the same as is equivalent to four hundred times the figure of the produce index of such land as fixed, adopted or prescribed by the Federal Land Commission.

(ii) The land for which produce index has not been fixed, adopted or determined by the Federal Land Commission, the value of agricultural land shall be the value as determined under clause (i) for similar land in the areas which are nearest to such land.

Explanation.-- For the purposes of this clause, produce index unit (PIU) shall have the same meaning as is assigned to it by the Land Reforms Act, 1977 (II of 1977).

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7A. Reference to valuer.-- (1) Subject to the provisions of this Act, the Deputy Commissioner may require the valuer to determine the value of any property.

(2) For the purposes of determining the value of property under sub-section (1), the valuer may, with the prior approval of the Inspecting Additional Commissioner of Wealth-tax, enter upon and inspect such property at any reasonable time.

(3) Nothing contained in sub-section (1) shall be so constructed as to make it obligatory on the Deputy Commissioner to make a reference to a valuer or valuers, as the case may be, or to adopt the value as determined by any valuer or valuers.