Income Tax Return: Disclosure of Assets while filing ITR

Disclosure of assets while filing ITR: Government of India has been introducing various changes to the Income Tax Returns. One such compliance in ITR is the “Schedule AL”. Generally, a taxpayer carrying on business or profession is required to fill in details of assets and liabilities through a Balance Sheet in the ITR. However, in some cases, it is mandatory for taxpayers to disclose their assets and liabilities at the end of the year. Such taxpayer can fill in the details through the Schedule AL. This is done in order to detect the cases of disproportionate increase in the assets as compared to known source of income, the government has mandated individual tax payers to disclose certain assets in their ITR or income tax return.

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Who is required to disclose the assets in ITR?

The requirement for asset disclosure applies to taxpayers whose taxable income exceeds 50 lakh rupees per year. Smaller taxpayers are therefore exempt thanks to the higher threshold level. It does not apply to those submitting ITR 1 or ITR 4 because if a taxpayer’s total income exceeds fifty lakh, they cannot use ITR 1 or ITR 4.

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The types of assets you must include in your ITR:

The schedule AL structure is the same for ITR forms 2 and 3, with the exception that for ITR form 3, you must provide information on your ownership stakes in partnerships and other businesses if you own any share in the firm’s assets. You are not required to include the specifics of any asset that has been sold throughout the year because the information to be reported must be as of March 31 of that Financial Year.

Reporting of immovable Assets:

You must include the asset’s description, address, and cost for any immovable properties, such as land and buildings, that you owned as of March 31. You must disclose any asset you own, regardless of whether you bought it yourself, received it as a gift, or inherited it. If the property is jointly owned, you must provide information about your ownership stake.

To be safe, you can disclose the fair market value of the property as of 1st April 2001, which is accepted by the income tax department for capital gains computations in cases where assets were acquired prior to 1st April 2001, when providing the cost for property that was not purchased by you and in case you do not know the cost incurred by the previous owner.

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In case the asset was acquired later on, you can obtain a valuation report and state that value. Alternatively, you can state the stamp duty valuation of the property on 1st April 2001 or the stamp duty value on the date of acquisition in which it came to be owned by you.

If you have not yet taken possession of a property that is being built, you do not need to provide any information about it since a property that is being built is not a building. The total amount paid to the builder can, however, be classified as a loan and advance to be on the safe side.

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Information on movable assets:

As of March 31 of the relevant financial year, the financial assets such as cash on hand, bank account balances, investments in shares and securities, insurance policies, loans and advances given, as well as other movable assets such as jewelry, bullion, cars, yachts, boats, and aircraft, as well as works of art, must be disclosed under movable assets.

Taxpayers must provide their company’s balance sheet in ITR 3 if they are involved in any kind of business or profession and keep books of accounts. Such tax payers are required to provide information about any assets that are not listed on the balance sheet for their business that is included in the ITR

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The same rule applies to all movable assets for assets not purchased by you, as was mentioned above in relation to immovable assets. You must report the specifics of any jewelry, as well as any bullion you own in the form of bars and coins. You must submit information regarding the balance in all types of bank accounts in addition to saving account information when providing bank balances. So make sure to include the balance of your fixed deposits, PPF accounts, recurring deposits, and senior citizen savings accounts. If any overdraft account, including one for a house loan, has a positive balance as of March 31 report the balance.

The list of movable assets is not all-inclusive, and some assets, such as balances in provident fund, NPS, and superannuation accounts, as well as balances with cooperative societies, post offices, and other institutions, are exempt from the requirement to be mentioned in the ITR.

The value of any liabilities must also be stated under the heading liabilities if they are related to any of the assets listed above. Therefore, if you have a home loan, you must include in liabilities the amount still owed as of March 31 of the relevant financial year.