Income Tax Department has finally released the new Income Tax Forms for Assessment Year 2013-14. The major change in the forms so notified requires disclosure of all assets in income tax return by the assessee. Such disclosure of assets is applicable to the assessee who are liable to submit form ITR-3 and ITR-4 i.e.
- The taxpayer is earning Income from Proprietorship/Partnership Business or Profession; and
- The total income of the Taxpayer exceeds Rs. 25 Lakhs for the year.
The disclosure requirements is only applicable when both the above conditions are satisfied. In such case assessee is also liable for efiling of tax return.
Earlier for the Assessment Year 2012-13, schedule FA was inserted to ITR-2, ITR-3 and ITR-4 for disclosure of assets outside India and for the Assessment Year 2013-14 Schedule AL (Asset/Liability) has been inserted in form ITR-3 and ITR-4.
For your Information
- ITR -3 is required to be filled by Individuals/HUFs being partners in firms and not carrying out business or profession under any proprietorship.
- ITR-4 is required to be filled by individuals and HUFs having income from a proprietary business or profession.
A screenshot of the details required to be disclosed in Schedule AL is enclosed:
Key notes regarding the disclosure requirement:
- The Business Assets already disclosed in balance sheet are not required to be disclosed in the Schedule AL.
- The Cost of the Asset is to be disclosed and not its current market value.
- The Assets to be disclosed does not include assets with personal affects such as wearing apparel, furniture, etc.
- The corresponding liablities related to assets also needs to be disclosed.
Issues and Road Ahead for Mandatory Disclosure of Asset in Income Tax Return
The introduction of Schedule AL in Income tax return will keep a check on the taxpayers with huge assets, that are evading Wealth Tax on their assets. It will also keeps a check on income earned and assets acquired by an assessee which was previously not justified due to lack of information. However there are certain issues that needs to be answered for proper implementation of the Mandatory Disclosure of Asset in Income Tax Return. Some of them are:
- The cost of movable properties and jewellery are unknown and not properly documented than how can a assessee justifies them.
- Similarly the cost of assets received as a gift can’t be determined.
Assessee can face many issues during the practical implementation of the disclosure requirement but as a whole we can say its a welcome step by the government.