All assets must be mentioned by the taxpayer in his income tax return, according to the new income tax returns forms that the income tax department has made available for assessment years 2016–17 and beyond. The need for asset disclosure in an income tax return is only applicable to taxpayers who meet the following criteria:
The taxpayer’s total annual income exceeds Rs. 50 lakh.
Only taxpayers with revenue from proprietorship or partnership businesses over Rs. 25 lakh were previously required to disclose their assets and liabilities. However, beginning with the assessment year 2016–17, all taxable categories—including those who are salaried—with incomes over Rs. 50 lakh must disclose their assets.
Reasons, why assets must be shown in income tax returns, are most often
There have been several instances in the past where it was determined that a taxpayer’s assets did not support the income he was receiving. The tax department has demanded that all assets be revealed in the income tax return for people earning more than Rs. 50 lakhs from any source in order to maintain track of the assets acquired and the income received.
Herewith is a copy of the information that must be given in Schedule AL of the income tax return.
- A taxpayer must disclose all of his assets as well as his matching liabilities on Schedule AL of their income tax return. However, this schedule does not require disclosure of the company assets already shown in the Balance Sheet. Only those assets must be mentioned in this Schedule that was not included in the Balance Sheet.
- The assets that must be stated in the income tax return do not include any personal effects or moveable property (such as clothing and furniture) used for the taxpayer’s or any dependent family member’s personal use. Personal effects don’t include the assets that were described above, nevertheless.
- Only the Asset’s Cost, not its current market value, must be mentioned.
The following assets are included in jewelry, gold, etc.:-
- Gold, silver, platinum, or other precious metal ornaments
- stones, whether or not placed in furniture, utensils, or other objects, whether precious or semi-precious.
Practical Issues with Asset Disclosure in Income Tax Returns
There are several issues with the required disclosure of assessments, some of which are covered below:-
- The asset’s cost is frequently a mystery. When it comes to immovable assets, the price is often accurately recorded, but when it comes to moveable assets, such as jewelry that your parents gave you, the price may or may not be known.
- There should be an advance payment for the acquisition of a capital asset made before the end of the year to be reported as an asset or a liability for an asset that has not yet been acquired.
Even though the income tax department may benefit from collecting asset information on high-net-worth people thanks to the mandated disclosure of assets in the income tax return, the government has to be more specific about how to fill in the blanks in this timetable.
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