Saturday 23 July 2016

Mandatory Disclosure of Asset 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.
As one can see from Schedule AL in  the new income tax forms released by the income tax department for assessment year 2016-17 onwards requires that all assets as well as corresponding liabilities 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:-
  1. 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 (including Salaried ) having income of more than Rs. 50 Lakhs.
Following points may be noted while giving a disclosure of assets as mentioned above. 
  1. 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. 
  2. 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.
  3. Only the Cost of the Asset is to be disclosed and not its current market value.

Following is the list of Assets and liabilities which needs disclosure 
1) Land 
2) Building
3) Bank Balance
4) Fixed Deposit
5) Shares and securities
6) Insurance policies
7) Loans and advances given 
8) Cash in Hand
9) Jewellery and Bullion 
10) Archaeological collections, Drawings, paintings, sculptures, or work of art
11) Vehicles, yachts, boats and aircrafts.
12) Liabilities in relation to 1 to 11 above. 


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