Section 5 in The Wealth- Tax Act, 1957

5. Exemptions in respect, of certain assets.

(1) 2[ Subject to the provisions of sub- section (1A), wealth- tax shall not be payable by an assessee in respect of the following assets] and such assets shall not be included in the net wealth of the assessee--

(i) any property held by him under trust or other legal obligation for any public purpose of a charitable or religious nature in India;

(ii) the interest of the assessee in the occupation property of any Hindu undivided family of which he is a member;

(iii) any one building in the occupation of a Ruler declared by the Central Government as his official residence under paragraph 13 of the Merged States (Taxation Concessions) Order, 1949 , or paragraph 15 of the Part B States (Taxation Concessions) Order, 1950 ;

(iv) 3[ one house or part of a house belonging to the assessee Provided that, where the value of such house or part exceeds one hundred thousand rupees, the amount that shall not

1. Ins. by Act 32 of 1971, s. 31 (w. e. f. 1- 4- 1972 ). 2 Subs. by Act 19 of 1970, s. 26, for certain words (w. e. f. 1- 4- 1971 ). 3 Subs. by s. 26, ibid., for" clause (iv)" (w. e. f. 1- 4- 1971 ). 4 Certain words omitted by Act 32 of 1971, s. 32 (w. e. f. 1- 4- 1972 ).

be included in the net wealth of the assessee under this clause shall be one hundred thousand rupees;]

(iva) 1[ agricultural land belonging to the assessee subject to a maximum of one hundred and fifty thousand rupees in value: Provided that where the assessee owns any house or part of a house situate in a place with a population exceeding ten thousand and to which the provisions of clause (iv) apply and the value of such house or part of a house together with the value of the agricultural land exceeds one hundred and fifty thousand rupees, then the amount that shall not be included in the net wealth of the assessee under this clause shall be one hundred and fifty thousand rupees as reduced by so much of the value of such house or part of house as is not to be included in the net wealth of the assessee under clause (iv):]

(ivb) 2[ one building or one group of buildings owned by a cultivator of, or receiver of rent or revenue out of, agricultural land: Provided that such building or group of buildings is on or in the immediate vicinity of the land and is required by the cultivator or the receiver of rent or revenue, by reason of his connection with the land, as dwelling house, store- house or outhouse;]

(v) the rights under any patent or copyright belonging to the assessee: Provided that they are not held by him as assets of a business, profession or vocation and no income or benefit accrues to him therefrom;

(vi) the right or interest of the assessee in any policy of insurance before the moneys covered by the policies become due and payable to the assessee;

(via) 3[ the right of the assessee to receive any annuity payable by the Central Government under the provisions of section 280D of the Income- tax Act;]

1. Ins. by Act 14 of 1969, s. 24 (w. e. f. 1- 4- 1970 ). 2 Ins. by Act 19 of 1970, s. 26 (w. e. f. 1- 4- 1971 ). 3 Ins. by Act 42 of 1970, s. 59 (w. e. f. 1- 4- 1965 ).

(vii) the right of the assessee to receive a pension or other life annuity in respect of past services under an employer;

(viii) furniture, household utensils, wearing apparel, provisions and other articles intended for the personal or household use of the assessee 1[ but not including jewellery]: 3[ Provided that the furniture, utensils or other articles are neither made wholly or partly of, nor contain (whether by way of embedding, covering or otherwise), gold, silver, platinum or any other precious metal or any alloy containing one or more of such precious metals: Provided further that nothing in this clause shall operate to exclude from the net wealth of the assessee any conveyance or conveyances to the extent the value or the aggregate value thereof exceeds the sum of twentyfive thousand rupees. Explanation 1.-- For the purposes of this clause and clause (xiii)," jewellery" includes--

(a) ornaments made of gold, silver, platinum or any other precious metal or any alloy containing one or more of such precious metals, whether or not containing any precious or semi- precious stone, and whether or not worked or sewn into any wearing apparel;

(b) precious or semi- precious stones, whether or not set in any furniture, utensil or other article or worked or sewn into any wearing apparel. Explanation 2.-- For the purposes of this clause," conveyance" means any motor car or other mechanically propelled vehicle, aircraft or boat;]

(viiia) 2[ growing crops (including fruits on trees) on agricultural land and grass on such land;]

(ix) 4[ the tools, implements and equipment used by the assessee for the cultivation, conservation, improvement

1. Ins. by Act 32 of 1971, s. 32 (w. e. f. 1- 4- 1963 ). 2 Ins. by Act 14 of 1969, s. 24 (w. e. f. 1- 4- 1970 ). 3 Ins. by Act 32 of 1971, s. 32 (w. e. f. 1- 4- 1972 ). 4 Subs. by Act 14 of 1969, s. 24 for clause (ix) (w. e. f. 1- 4- 1970 ).

or maintenance of agricultural land, or for the raising or harvesting of any agricultural or horticultural produce on such land. Explanation.-- For the purposes of this clause, tools, implements and equipment do not include any plant or machinery used in any tea or other plantation in connection with the processing of any agricultural produce or in the manufacture of any article from such produce;]

(x) the tools and instruments necessary to enable the assessee to carry on his profession or vocation, subject to a maximum of twenty thousand rupees in value;

(xi) instruments and other apparatus used by the assessee for purposes of scientific research;

(xii) any works of art, archaeological, scientific or art collections, books or manuscripts belonging to the assessee and not intended for sale;

(xiii) any drawings, paintings, photographs, prints and any other heirloom not falling within clause (xii) and not intended for sale, but not including jewellery;

(xiv) jewellery in the possession of any Ruler, not being his personal property, which has been recognised before the commencement of this Act by the Central Government as his heirloom or, where no such recognition exists, which the Board may, subject to any rules that may be made by the Central Government in this behalf, recognise as his heirloom at the time of his first assessment to wealth- tax under this Act;

(xv) 1[ 2[ deposits] under any scheme framed by the Central Government and notified by it in this behalf in the Official Gazette, to the extent to which the amounts of such deposits do not exceed the maximum amount permitted to be deposited therein;]

(xvi) ten year treasury savings deposit certificates, fifteen year annuity certificates, deposits in post office savings banks, post office cash certificates, 3[ post office national savings

1. Ins. by Act 19 of 1968, s. 32 (w. e. f. 1- 4- 1969 ). 2 Subs. by Act 19 of 1970, s. 26, for" fixed deposits" (w. e. f. 1- 4- 1971 ). 3 Subs. by Act 11 of 1958, s. 14, for" and post office national savings certificates" (with retrospective effect).

certificates, post office national plan certificates and 1[ twelve year national plan savings certificates, ten year defence deposit certificates and twelve year national defence certificates 2[ , to the extent to which the amount of such certificates or deposits do not exceed in each case the maximum amount permitted to be invested or deposited therein]];

(xvia) 3[ 6 1 2 per cent. Gold Bonds, 1977 , 7 per cent. Gold Bonds, 1980 and National Defence Gold Bonds, 1980 ;]

(xvii) the amount standing to the credit of an assessee, being a salaried employee, in any provident fund maintained by his employer to which the Provident Funds Act, 1925 , (19 of 1925 .) applies or which is a recognised provident fund within the meaning of 4[ clause (38) of section 2] of the Income- tax Act;

(xviia) 5[ the amount standing to the credit of an individual in any provident fund set up by the Central Government and notified by it in this behalf in the Official Gazette;]

(xviii) the property received by an assessee from Government in pursuance of any gallantry or merit award instituted or approved by the Central Government;

(xix) the value of any shares held by the assessee in any other company in any case where the assessee is a company;

(xx) 6[ the value of any equity shares held by the assessee in any company of the type referred to in clause (d) of section 45, where such shares form part of the initial issue of equity share capital made by the company 7[ after the 31st day of March 1964 , but before the 1st day of June, 1971 ], for a period of five successive assessment years commencing with the assessment year next

1. Subs. by Act 13 of 1963, s. 21, for" twelve year national plan savings certificates held by the assessee" (w. e. f. 1- 4- 1963 ). The words in italics were subs. by Act 11 of 1958, s. 14. 2 The words" held by the assessee" omitted by Act 19 of 1968, s. 32 (w. e. f. 1- 4- 1969 ). 3 Subs. by Act 41 of 1965, s. 6, for cl. (xvia). 4 Subs. by Act 46 of 1964, s. 5, for" Chapter IXA" (w. e. f. 1- 4- 1965 ). 5 Ins. by Act 19 of 1968, s. 32 (w. e. f. 1- 4- 1969 ). 6 Ins. by Act 10 of 1965, s. 70 (w. e. f. 1- 4- 1965 ). The original cl. (xx) was omitted by Act 20 of 1962, s. 12 (w. e. f. 1- 4- 1962 ). 7 Sub. by Act 32 of 1971, s. 32, for" after the 31st day of March, 1964" (w. e. f. 1- 4- 1972 ).

following the date on which such company commences the operations for which it has been established;]

(xxi) that portion of the net wealth of a company established with the object of carrying on an industrial undertaking in India within the meaning of the Explanation to clause (d) of section 45, as is employed by it in a new and separate unit set up after the commencement of this Act by way of substantial expansion of its undertaking: Provided that--

(a) separate accounts are maintained in respect of such unit; and

(b) the conditions specified in clause (d) of section 45 are complied with in relation to the establishment of such unit: Provided further that this exemption shall apply of any such company only for a period of five successive assessment years commencing with the assessment year next following the date on which the company commences operations for the establishment of such unit;

(xxii) 1[ any security of the Central Government or a State Government[ not being a security referred to in clause (xvi) or clause (xvia)];

(xxiii) any shares[ not being shares referred to in clause (xx)] held by the assessee in any Indian company where the assessee is an individual or a Hindu undivided family;

(xxiv) such debentures, issued by any co- operative society (including a co- operative land mortgage bank or a co- operative land development bank) or any other institution or authority, as the Central Government may, by notification in the Official Gazette, specify in this behalf;]

(xxv) units in the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963 );

(xxvi) any deposits with a banking company to which the Banking Regulation Act, 1949 , (10 of 1949 ) applies (including any bank or banking institution referred to in section 51 of that Act), or with a co- operative society engaged in carrying on the business of banking (including a co- operative land

1. Ins. by Act 19 of 1970, s. 26 (w. e. f. 1- 4- 1971 ).

mortgage bank or a co- operative land development bank);

(xxvii) any deposits with a financial corporation which is engaged in providing long- term finance for industrial development in India and which is approved by the Central Government for the purposes of clause (viii) of sub- section (1) of section 36 of the Income- tax Act;]

(xxviii) 1[ any shares held by the assessee in any co- operative society;

(xxix) any deposits with a co- operative society, not being deposits referred to in clause (xxvi) or clause (xxx), made by a member of the society;

(xxx) any deposits with a co- operative housing society made by a member of the society to whom a building or part thereof is allotted or leased under a house building scheme of the society, where such deposits have been made under such scheme.]

(1A) 2[ Nothing contained in sub- section (1) shall operate to exclude from the net wealth of the assessee any assets referred to in clauses (xv), (xvi), (xxii), (xxiii), (xxiv), (xxv), 3[ (xxvi), (xxvii), (xxviii), and (xxix)][ not being deposits under the Post Office Savings bank (Cumulative Time Deposits) Rules, 1959 ], to the extent the value thereof exceeds in the aggregate, a sum of one hundred and fifty thousand rupees: Provided that where the assets include any assets referred to in clause (xv) or clause (xvi)[ not being deposits under the Post Office Savings Bank (Cumulative Time Deposits) Rules, 1959 ] which have been held by the assessee continuously from a date prior to the 1st day of March, 1970 and the value of the assets so included exceeds the limit of one hundred and fifty thousand rupees by any amount, such limit shall be raised by the said amount.]

(2) Wealth- tax shall not be payable by an assessee in respect of any deposit made by the assessee with the Government or in any security of the Government or of a local authority not specified in 4[ clause (xv) or] 5[ clause (xvi) or clause (xvia)] of sub- section (1)

1. Ins. by Act 32 of 1971, s. 32 (w. e. f. 1- 4- 1972 ). 2 Ins. by Act 19 of 1970, s. 26 (w. e. f. 1- 4- 1971 ). 3 Sub. by Act 32 of 1971, s. 32, for (xxvi) and (xxvii)" (w. e. f. 1- 4- 1972 ). 4 Ins. by Act 19 of 1968, s. 32 (w. e. f. 1- 4- 1969 ). 5 Sub. by Act 54 of 1962, s. 5, for" clause (xvi)..

which the Central Government may, by notification in the Official Gazette, exempt from wealth- tax; but the value of any deposit or security so exempted shall be included in computing the net wealth of the assessee.

(3) Notwithstanding anything contained in sub- section (1), wealth- tax shall be payable by an assessee in respect of the assets referred to in 1[ clauses (xv), (xvi), (xix), (xxii), (xxiii), (xxiv), (xxv), 2[ (xxvi), (xxvii), (xxviii), and (xxix)] of sub- section (1) or in sub- section (2) for any assessment year unless the assets are held by him--

(a) in the case of shares in a company, from the date on which the shares were first issued by the company, or for a

1. Subs. by Act 19 of 1970, s. 26, for' clause (xvi) and clause (xix)" (w. e. f. 1- 4- 1971 ). 2 Subs. by Act 32 of 1971, s. 32, for" (xxvi) and (xxvii) (w. e. f. 1- 4- 1972 ).

period of at least six months ending with the relevant valuation date, whichever is shorter; and

(b) in the case of other assets, for a period of at least six months ending with the relevant valuation date: 1[ Provided that for the purpose of making any assessment for the 2[ assessment year] commencing on the 1st day of April, 1963 , the provisions of clause (b) shall not apply to ten year defence deposit certificates and twelve year national defence certificates held by the assessee on the relevant valuation date.] 5[ Explanation.-- For the purposes of clause (a) or clause (b) of this sub- section, in computing the period of six months in relation to any asset (not being any share or security held as stock- in- trade for the purposes of the business of the assessee) in a case where such asset (hereafter in this Explanation referred to as the relevant asset) was acquired by the assessee by conversion of, or in exchange for, or with the proceeds of, or with the money constituting, any other asset exempt from wealth- tax under sub- section (1) or sub- section (2), there shall be included, if the assessee acquired the relevant asset within thirty days after he 6[ ceased to own] such other asset, so much of the period for which the assessee 6[ has owned such other asset] as falls within the period of twelve months ending with the relevant valuation date.]