Schedule AL mandates taxpayer to furnish appropriate details pertaining to the assets and liabilities held as at the end of the year.
By Sudeep Das
A new kid on the block as far as the government’s drive to data collection is concerned – Schedule AL mandates taxpayer to furnish appropriate details pertaining to the assets and liabilities held as at the end of the year. The said schedule was initially inserted by the income tax department for the FY 2015-16 (or AY 2016-17), requiring the tax payers to disclose their assets and liabilities at the year end. This move is primarily aimed to create a database of the assets owned by a taxpayer along with corresponding liabilities to peruse whether such details are in-line with the income disclosed in the tax return by the taxpayer.
In view of the disclosure requirement sought by the said section of the tax return, this article seeks to provide an overview of what a taxpayer should be aware of prior to disclosing details in the Schedule AL.
Coverage: Any individual having ‘total income’ exceeding Rs 50 lakh is required to mandatorily furnish requisite details. A taxpayer otherwise than an ‘ordinary resident’ would be required to disclose assets and liabilities situated in India whereas an ‘ordinarily resident’ taxpayer is required to disclose all assets and corresponding liabilities located worldwide.
Definition of ‘total income’: As per the recent FAQ released by the tax department, ‘total income’ refers to the total taxable income arrived by the taxpayer post effectuating the Chapter VI-A (tax saving) deductions. Accordingly, details under Schedule AL need to be furnished by the taxpayer only when total income of the taxpayer is beyond Rs 50 Lakh. For instance, if the taxpayer has a total income of Rs 52.15 lakh pre Chapter VIA deductions. Post claiming deductions of Rs 1,50,000 under life insurance premiums, PPF, etc. along with Rs 50,000 for pension contributions and Rs 15,000 for medical insurance premium, totalling to Rs 215,000. Accordingly, the total income would be arrived at Rs 50,00,000 for the taxpayer. In this case, as the total income did not exceed Rs 50 lakh, this section is not required to be filled by the said taxpayer.
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Reporting amount: The amount in respect of movable and immovable assets required to be reported under Schedule AL would be the cost price of such assets to the taxpayer. Where a wealth-tax return was filed by the taxpayer and the asset was forming part of the said return, the value of such asset disclosed to be increased by the cost of improvement incurred after such date, if any. It is to be noted that the assets to be reported would include immovable assets such as land, building; financial assets such as bank deposits, shares and securities, insurance policies, loans and advances given, cash in hand, jewellery, bullion; movable assets such as vehicles, yachts, boats, aircraft along with any interest held in the assets of a firm or association of persons (AOP) as a partner or member thereof.
Further, in case, any asset became the property of the taxpayer under a gift, will, distribution of assets under a partition of HUF, succession, inheritance or devolution etc., the cost of such asset will be the cost at which it was acquired by the previous owner, as increased by the cost of any improvement incurred.
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In the scenario, where the cost of the asset acquired by the previous owner is not ascertainable by the taxpayer, and no wealth-tax return was filed in respect of such asset, the value of the said asset may be estimated at the circle rate or bullion rate, as the case may be, on the date of acquisition by the assessee as increased by the cost of improvements, if any, or as at 31 March 2017. In this context, “previous owner” would in relation to the said capital asset, owned by the taxpayer, means the previous owner of the capital asset who did not acquire the said asset by any mode mentioned above (i.e. not by modes including under a gift, will, distribution of assets under a partition of HUF, succession, inheritance or devolution).
In case the taxpayer is a partner/ member of a firm/ AOP, details of interest held in the assets of such firm/ AOP should also need to be disclosed under Schedule AL along with corresponding liabilities incurred.
While the above-mentioned Schedule AL has been mandated for the individuals, it is pertinent to note that the said compliance and disclosure requirements were already present in other forms (ITR-3 and ITR-4) and have now been extended to the high net-worth individuals. It would be interesting to view as to how the government seeks to utilise the data collected in future.
(The author is a Chartered Accountant)