Disclosure of Assets in Income tax Returns

In order to detect cases of disproportionate assets owned by a taxpayers as compared to his known sources of income, the income tax department wants taxpayer with income over 50 lakhs to report various assets and liabilities in Income Tax Return (ITR).

Applicability:

Every Person having Taxable Income more than Rs.50 Lakhs in the Financial Year is required to disclose all the Assets in the Income tax return. However, if Such tax payer is engaged in business he should also disclose the asset which are not included in the Balance Sheet.

n 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. Let us discuss.

To whom this requirement applies?

The provision for disclosure of assets is applicable for the tax payers whose taxable income exceeds the 50 lakh rupees in a year. So with such higher threshold limit smaller taxpayers are spared. Since ITR 1 and ITR 4 cannot be used by a taxpayer whose total income exceeds fifty lakhs, it does not apply those submitting ITR 1 or ITR 4.

Nature of the assets you have to submit in the ITR:

The format of the schedule AL is same for both the ITR form 2 and 3 except that for ITR 3 you are required to furnish details of your interest in the partnership firms etc where you have any shares in the assets of the firm. Since the details of asset to be reported are to be mentioned as on 31st March 2021, you need not furnish the details of any asset which has been disposed off during the year.

Immovable Assets reporting

  • Immovable assets like land and buildings owned by the taxpayer as of 31st March of the financial year must be reported.
  • All immovable properties, whether purchased or acquired through inheritance or gift, have to be disclosed. 
  • The reporting requires the description of the asset, address and cost of the immovable asset.  
  • For jointly owned property, details of the taxpayers share in the property are required to be mentioned. 
  • In case the cost of the property cannot be derived due to property acquired by way of inheritance or gift, fair market value (FMV) of the property as of 1 April 2001, which is the revised base year accepted by the income tax department for capital gains computations should be mentioned.
  • For properties acquired after 1 April 2001, you can report the cost as the stamp duty value as the date of purchase or the cost mentioned in the valuation report obtained from a registered valuer.
  • Under construction, the property is not required to be reported in the schedule of assets; however, the aggregate amount of advance paid (to builders or contractors) can be added to the ‘loans and advances’ and reported in the assets. 

Details of movable assets: 

Items to be disclosed under the movable assets include various financial assets like cash in hand, balances with banks, investments in shares and securities, insurance policies, loans and advances given, and other movable asset like jewellery, bullion, vehicles, yachts, boats and aircraft, work of art etc. as on 31st March 2021. 

The tax payers who are engaged in any business or profession and maintaining books of accounts are required to submit the balance sheet of their business in the ITR 3. Such tax payers have to furnish the details of the assets which are not already included in their business balance sheet being furnished in the ITR.