The new income tax forms released by the income tax department for assessment year 2016-17 onwards require that all assets should be disclosed by the taxpayer in his income tax return. The condition for disclosure of assets in the income tax return is only applicable all those taxpayers who satisfy the following condition:-
- The total income of taxpayer is more than Rs. 50 Lakhs.
Earlier disclosure of assets and liabilities was only for taxpayers having income of more than Rs. 25 Lakhs from Proprietorship/ Partnership business. However, from assessment year 2016-17, disclosure of assets is mandatory for all category of taxpayers (incl Salaried) having income of more than Rs. 50 Lakhs.
Probable reason for mandatory disclosure of Assets in Income Tax Return
There have previously been many cases wherein it has been found that the assets of a taxpayer do not justify the income earned by him. So as to keep a check on the Assets acquired and the Income earned, the tax department has mandated that all assets be disclosed in the income tax return in case of individuals earning more than Rs. 50 Lakhs from any source.
The disclosure of assets is required to be made in Schedule AL. The new income tax forms can be downloaded from the following link:-
A copy of the details required to be disclosed in Schedule AL of the income tax return has been enclosed herewith:-
- All assets held by a taxpayer and his corresponding liabilities have to be furnished in Schedule AL of the income tax return. However, the business assets already disclosed in the Balance Sheet are not required to be disclosed in this schedule. Only the assets which have not been disclosed in the Balance Sheet are required to be disclosed in this Schedule.
- The assets to be disclosed in the income tax return will not include any assets with personal effects i.e. to say, movable property (including wearing apparel and furniture) help for personal use by the taxpayer or any member of his family dependent on him. However, personal effects exclude the assets specifically mentioned above.
- Only the Cost of the Asset is to be disclosed and not its current market value.
Jewellery, Bullion etc includes the following assets:-
- Ornaments made of Gold/Silver/Platinum or any other precious metal
- Precious or semi-precious stones, whether or not set in any furniture, utensil or any other article
Practical Problems in mandatory disclosure of assets in Income Tax Return
There are many problems in mandatory disclosure of asses which have been discussed below:-
- In many cases, the cost of the asset is unknown. In case of immovable assets, the cost is usually properly documented but in case of movable assets like Jewellery which was gifted to you by your parents, the cost of such assets may or not be known.
- In case you have made an advance payment for purchase of a capital asset before the end of the year, would this be shown as an asset or a liability for an asset yet to be purchased
Although the mandatory disclosure of assets in the income tax return may help the income tax departmenr in getting asset details of high net worth individuals, more clarity is expected from the govt on how to fill the details in this schedule.