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According to the Income Tax Department, those with high income need to disclose certain assets in their Income Tax Return. The objective behind this disclosure of assets is to detect cases with disproportionate increase in assets compared to the reported income source to the government. In this article, we have discussed about reporting of immovable and moveable assets.
Table of Contents
As per the Income Tax Act, it is mandatory for taxpayers to disclose assets and liabilities having taxable income of more than 50 lakh rupees in a particular financial year. The condition of disclosing assets is only applicable to those with high income, and therefore small taxpayers have relief from this compliance burden. Forms ITR-1 and ITR-4 shall be applicable only when the total taxable income is lesser than 50 lakh rupees. Those taxpayers who file these forms don’t have to report their assets and liabilities in their Income Tax Return.
Forms ITR-2 and ITR-3 have schedule AL meaning Asset and Liability Statement that is similar in both terms except that ITR-3[1] requires an additional detail of interest in partnership firms in case where taxpayers hold a share in the assets of the firm.
Under schedule AL (Asset and Liability Statement), the details regarding assets held on March 31 should be disclosed, and the details of the assets disposed of in the year also need to be disclosed.
Details regarding Reporting of immovable assets are mentioned below:
The list of immovable assets is not exhaustive, and assets such as balance in provident fund account, NPS, superannuation account etc., are not required to be disclosed in the ITR.
Details regarding Reporting of movable assets are mentioned below:
Hence, the disclosure of assets helps in identifying the cases with disproportionate increase in assets compared to the reported income source to the government. It may be noted here that in case where the taxpayer has any liability outstanding of any assets reported, the liability should be disclosed also under the head liabilities. For instance- outstanding home loans as of March 31, 2021, should be reported in liabilities.
Read our article:Know the Various Types of Income Tax Assessments
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