Government of India has been introducing various changes to the Income Tax Returns. One such compliance in ITR is the “Schedule AL”. Generally, a taxpayer carrying on business or profession is required to fill in details of assets and liabilities through a Balance Sheet in the ITR. However, in some cases, it is mandatory for taxpayers to disclose their assets and liabilities at the end of the year. Such taxpayer can fill in the details through the Schedule AL.
What is Schedule AL?
This schedule requires the taxpayer to disclose details of various assets owned by them & the corresponding liabilities. But, it is mandatory for specified assessee only. The reason behind it’s inclusion was to have a record of all the assets owned by certain group of people. The disclosure of assets consists of immovable property, movable property and financial assets owned by the taxpayer. The liabilities include all liabilities of the taxpayer in relation to such assets.
When is Schedule AL (Assets and Liabilities) applicable?
Not all the tax payers have to disclose their assets and liabilities. The requirement to furnish particulars of certain assets and liabilities applies individuals and HUFs having an annual income exceeding INR 50 lakh. This requirements are applicable for those filing ITR 2 and ITR 3. This is in addition to the Balance Sheet of the business or profession to be filed in ITR-3.
What if total income of taxpayer is exactly INR 50 lakhs?
Your total income is calculated by subtracting tax saving deductions under Chapter-VI-A from Gross Total Income of a taxpayer. In case, total income of taxpayer is coming exactly INR 50 lakhs, then Schedule AL is not applicable.
For better understanding, lets take an example of Sweksha.
Her gross income per annum is INR 53 lakh. However, she gets a tax deduction of INR 1.5 lakh for investments and expenditures under section 80C and INR 50000 under section 80D. In addition, she has been paying home loan instalments and qualifies for the deduction on home loan interest of INR 1 lakh per annum.
Therefore this brings down her net income to INR 50 lakh. Now, she is not required to file Schedule AL in her ITR.
Further, if there was no home loan interest deduction in that case, the net income would amount to INR 51 lakh. This income would exceed the threshold limit of INR 50 lakh. Consequently, it would be mandatory for Sweksha to fill Schedule AL.
What details are required to be disclosed in schedule AL?
Taxpayers will have to report the following details in Schedule AL:
- Immovable Property: Cost of Land and Building owned.
- Movable Property: Cash in hand, cost of Jewelry, bullion, aircraft, vehicles, yachts, boats.
- In case of ITR 3 additional details regarding deposits or investments made in banks, investment in shares and securities, loans and advances given, insurance policies, cost of archaeological collections, drawings, paintings, etc. are to be provided.
- Liability (loans) in relations to the above mentioned assets and investments.
Guidelines to file Schedule AL (Assets and Liabilities)
Here are a few points you must comply to, while filing Schedule AL:
- You must disclose your assets at cost. Also, you can include any cost of improvement incurred on the asset.
- The assets mentioned will not include personal accessories i.e. wearing apparel, furniture held for personal use by the taxpayer or dependent any family member.
- The ‘assets’ to be reported will include land, building along with immovable assets; financial assets such as shares, securities, and deposits; loans and advances, insurance policies, cash in hand, jewellery, vehicles. Further, movable assets such as yachts, aircraft, and boats, and bullion.
- Jewellery includes :
- Ornaments made of gold, silver, platinum, any other precious metal, or an alloy made of one or more of such precious metals. It may or may not contain precious or semi-precious stones.
- Details of precious or semi-precious stones whether or not set in any utensil, furniture, or any other apparel.
- If the asset is a gift, by will, or any other mode in Section 49(1) and not covered by the above clause:
- The cost of such asset will be the cost of the previous owner plus the cost of any improvement incurred by the previous owner.
- If the cost of such asset is not ascertainable and no wealth tax return was filed for that asset, the value can be estimated at the circle rate or bullion rate as per the date of acquisition by the assessee.
- Non-residents and not ordinarily resident individuals must provide details of their assets situated in India.
- In the case of liabilities, all liabilities incurred in relation to the assets should be reported such as:
- Housing loan
- Vehicle loan
- Personal loan
Yes, schedule Al is applicable irrespective of residential status to individuals and HUFs if the taxable income exceeds INR 50,00,000
Yes, you are required to mention the same in Schedule AL as well.