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Assets & Liabilities Reporting — Explained
In general, individuals acquire assets while incurring liabilities. There are instances where the taxpayer’s acquired assets are inconsistent with their income source.
The income tax department therefore implemented the principle of disclosing assets and liabilities on income tax returns. This functionality aids the Income Tax Department in identifying instances of asset appreciation that is disproportionate to an individual’s income source.
1. Applicability
- Schedule AL is applicable to the Individuals/HUF whose Net Total income exceeds Rs 50,00,000 during the financial year.
- Schedule AL can be filled only in ITR 2 and ITR 3.
NOTE on NRI, RNOR Status
In Case of Non-Resident (NRI) or Resident but not ordinarily Resident (RNOR) whose income is more than 50 lakhs, they are required to furnish the details of assets located in India.
FOREIGN ASSETS REPORTING
If you own foreign assets, you must report the Foreign Assets (FA) under Schedule FA while filing your income tax return (ITR) as resident.
2. Schedule AL
- Schedule AL means statement of disclosure of assets and liabilities by the taxpayers in the Income Tax Returns.
- Schedule AL is applicable from AY 2016-17
- Even if the taxpayers fill the balance sheet in ITR 3, he is required to fill schedule AL.
3. Details to be reported in Schedule AL
The following are the details required to be reported in Schedule AL
- Immovable Property — Immovable Property includes land, Residential buildings (house, apartment or villa etc.), Commercial buildings (including long-leased), Agriculture lands, Farmlands etc. The following details needs to be included.
- Description of Asset
- Full Address (Flat No, Name of premises, Road, Area, City and Pin code)
- Amount
- Movable Property — Amount needs to be given for following assets.
- Jewellery, Bullion etc
- Archaeological Collections, drawings, paintings, sculpture or any work of art
- Vehicles (motor bike, car, any other vehicle), Yachts, boat and aircrafts
- Bank (including all deposits and balances)
- Shares and Securities
- Insurance Policies
- Loans and Advances given (If you have given any amount as a loan to anyone)
- Cash in hand
- Interest held in the assets of a firm or AOP as a partner or member thereof (Applicable for ITR 3 only) :
Jewellery includes
- Ornaments made of gold, silver, platinum or any other precious metal or any alloy containing one or more of such precious metals, whether or not containing any precious or semi-precious stone, and whether or not worked or sewn into any wearing apparel.
- Precious or semi-precious stones, whether or not set in any furniture, utensil or other article or worked or sewn into any wearing apparel.
- Name and address of Firm/AOP
- PAN of Firm/AOP
- Taxpayer’s investment in the firm/AOP on cost basis
- Liabilities in relation to above assets : These include Home Loans, personal loans, business loans, vehicle loans etc.
4. Valuation of Assets and Liabilities
- The assets in Schedule AL needs to be reported at the cost price of such asset to the taxpayer.
- If the assets are received as a gift, will or inheritance, the cost of asset to the previous owner will be consider as cost to the taxpayer.