You need to disclose these assets to the taxman Filing income tax returns?
July, 11th 2018
In order to detect cases of disproportionate assets owned by a taxpayer as compared to his known sources of income, the Income Tax Department wants taxpayer with income over Rs 50 lakh to report various assets and liabilities in income tax return (ITR). The requirement was implemented in 2016 and has since been modified from time to time. Let us discuss the latest requirements in detail.
To whom this requirement is applicable: It is not that each and every tax payer has to report details of his assets and liabilities. The requirement to report the assets and liabilities is only applicable in case your taxable income exceeds Rs 50 lakh for the year. So, people who are eligible to file ITR 1 (Sahaj) do not have to furnish these details. In case you are engaged in a business and thus furnishing your balance sheet in the ITR, you are required to furnish only details of assets which are not already disclosed in the balance sheet.
What assets are required to be reported: The format for disclosure of assets and liabilities is the same for all ITRs, except form ITR 3 and 4 wherein you are required to submit details of interest in the firm in which you are a partner. You are required to furnish details of your assets and liabilities as on March 31 under the AL schedule. So, any asset disposed of during the year will not form part of the schedule.
Disclosure for immovable properties: You have to disclose details of immovable properties i.e. land and building owned by you in schedule AL. While submitting the details of immovable properties, you have to mention the description, cost and address of the property. Please note that besides disclosing assets purchased by you, you also have to disclose details of any immovable asset received as gift or inherited by you. In case you inherit a house in your ancestral village, you have to furnish the details here. Even if you are a joint owner of a property, you still have to furnish the details in cases where you have inherited a house jointly with your relatives or bought any property jointly. While disclosing the cost in such cases you may face some problems as you may not have the details at which the person, from whom you had inherited or received the same as gift, had purchased it for. In order to comply with the requirement and as a safe measure you can indicate the market value as on April 1 as this is acceptable as cost for capital gains calculation purposes. In case any money is borrowed for immovable property or is borrowed on security of the asset, the same also needs to be disclosed in the schedule.
Disclosure of movable assets: Under movable properties, the assets to be disclosed include financial assets like cash in hand, bank balances, shares and securities, loans and advances, and other movable asset like jewellery, bullion, vehicles, yachts, boats and aircraft, work of art etc as on March 31. Under jewellery, you are required to disclose details of jewellery but also bullion held in raw form. In case you own any gold bar or coins, the cost of the same needs to be disclosed in the schedule. In case of assets inherited, the same principle as discussed above should be used. While disclosing the details of bank balances, one will have to disclose details of your loan account in case the same has a positive balance. In case of shares and securities, in cases where you have received these by way of gift or as inheritance and you do not know the cost, the market price as on April 1, 2001 may be furnished as a safeguard.
Traditional insurance policies may be treated as investments, but term plans, where you do not get any money back if you survive the policy term, cannot be treated as investment. Since no distinction is made between traditional policies and term plans, I would advise you to include premiums paid till date on term plans as well under the head insurance policies. You are also required to disclose the details of your vehicles, yatch, boats, aircraft etc. Vehicles which are not used and yet to be discarded or are being maintained as antique piece also needs to be disclosed.