Magazine Expert Advice Subhash Lakhotia

Subhash Lakhotia	Evaluate your jewellery, save harrassment
	You can save a lot of troubles by evaluationg your jewellery and submitting a statement along with your Wealth Tax return
Most of the jewellery of intelligent honest tax payers came on tax records consequent to the Voluntary Disclosure of Income Scheme, 1997. As is well known, majority of the total declarations made under VDIS involved jewellery. This scheme provided a unique opportunity to declare the unaccounted for jewellery without giving any proof or evidence about the source of investment, year of purchase or other such details. In view of the provisions contained in the Voluntary Disclosure Scheme, there was no Wealth Tax liability on the jewellery only up to the assessment year 1997-98. After this, the jewellery was required to be declared under the Wealth Tax Act. There is no specific separate exemption under the Wealth Tax Act in respect to jewellery The total general exemption of Wealth Tax is Rs 15 lakh, inclusive of all the taxable assets and jewellery. With effect from assessment year 1998-99, tax payers are required to voluntarily file their Wealth Tax returns, specially because of substantial quantum of jewellery possessed by them. Irrespective of the year of purchase or inheritance of the jewellery, the valuation of the jewellery is done on the close of the accounting year, i.e.on March, 31of every year. The value at which jewellery has to be shown in the Wealth Tax return is contained in Sdchedule III of the Wealth Tax Act, 1957 rule 18(G). The rule discusses in detail the norms for determining the value of jewellery for evaluating Wealth Tax. According to the general provisioin, the value of the jewellery is estimated as the price it would fetch if sold in the open market on the valuation date. It is also provided in this rule that when the assessee is submitting his Wealth Tax return, he can submit a statement that the value of jewellery on the valuation date does not exceed the exemption limit. The statement has to be submitted in the prescribed form, contained in Form 08A. This form contains the statement of valuatioin of the jewellery with separate columns for Number of items, their description, gross weight, net weight of the precious metal, description and weight of the precious or semi- precious stones, if any, estimated value of the stones and the total value of the jewellery item. This statement should be sgined by the assessee. However, where the value of jewellery on the valuation date exceeds Rs. 5 lakh, the asessee is required to obtain a report form a registered valuer and enclose the same with the Wealth Tax return. This means if the value of jewellery is Rs. 5 lakh or less, no valuation certificate is necessary from the government approved valuer,and the assessee himself can value the jewellery in the prescribed form. On the other hand, if the value of the jewellery exceeds Rs. 5 lakh, the assessee must obtain the valuation report from a government approved valuer. The government has appointed a number of registered valuers for the evaluation of jewellery. The assessee get the valuation done from any of them. While giving the evaluation report, the registered valuer has to complete all the columns contained in the valuation report in Form 08. The major constituents of this report are the purpose for which valuation is being made, date as on which evaluation is done, name of the jewellery item, if the asset is under joint ownership/co-ownershp, share of each owner, description of each item of jewellery, total gross weight of each item of jewellery, net weight of the precious metal (gold, silver, platinium) in each item description of the precious/semi-precious stones, weight of each precious or semi precious stone in carats, value of each stone and the total value of the precious metal content in all the items of the jewellery, and finally the total value of the jewellery. When the tax payer submits a statement with his Wealth Tax return regarding the valuation of the jewellery, specially when the value does not exceed Rs 5 lakh, and the Assessing Officer feels the value is less than its market value, the matter may be referred to to the Government Valuatiion Cell, or the Valuation Officer. As per Section 16A of the Wealth Tax Act, those cases are referred to the Valaution Officer where the market value of the asset exceeds the projected value by more than one third of the asset value or Rs 50,000. Similarly, if the tax payers has filed Wealth Tax return along with a certificate from the government approved valuer, and the Assessing Officer feels the declared value is less than its market value, he can refer the case to the Valuation Officer. In such cases, the valuation done by the Valaution Officer is treated as the market value. A question that arises now is: whether the jewellery is required to be evaluated every year. This aspect has been cleared in Rule 19 of Schedule III of the Wealth Tax Act, 1957, which provides for adjustment in the value of jewellery for subsequent assessment years. According to this rule, the value of jewellery is determined either by the asessee (where the value is up to Rs 5 lakh) or by an approved valuer (where the value exceeds Rs 5 lakh), for any assessment year shall be taken to be the value for four subsequent assessment years, by making the following adjustments: (a) where the jewellery includes gold, silver or any alloy containing gold or silver, the value of goldor silver or such alloy as on the valuation date relevant to the concerned subsequent assessment year shall be substituted for the value of such goldor silver or alloy on the valuation date relevant to the first assessment year; (b) where any jewellery or part of jewellery is sold or otherwise disposed of by the assessee, or any jewellery or part of the jewellery is acquired by him, on or before the valuation date relevant to the concerned subsequent year, the valuation of the jewellery determined for the first assessment year shall be reduced or increased, as the case may be. The value thus reduced or increased shall be the value of the jewellery for such subsequent assessment year. In view of the provisions in Rule 19 of Schedule III of the Wealth Tax Act, 1957 the hassle of evalua-ting jewellery year after year is done away with. By the adjustments mentioned above, the assessee can file his WealthTax return for the next four assessment years. Thus the tax payers are saved a lot of unnecessary botheration. The above mentioned adjustments can be made ina simple statement and enclosed with the Wealth Tax return. Valuation of the jewellery and submission of Wealth Tax return is very important particularly for those possessing substantial amount of jewellery. It can also save the embarassment if there is an Income Tax raid.
Rs. 5 lakh, the asessee is required to obtain a report form a registered valuer and enclose the same with the Wealth Tax return. If the value of jewellery is Rs. 5 lakh or less, the assessee himself can value the jewellery in the prescribed form.
If the Assessing Officer feels the value is less than its market value, the matter may be referred to to the Government Valuation Cell