Indians earning more than Rs. 50 lakh a year will have to declare the break-up of their net worth, stipulates the new income tax return form (ITR) for financial year 2015-16, reported the Economic Times.
All assets and liabilities at the end of financial year 2015-16, by all individuals and Hindu Undivided Families (HUFs) earning over Rs. 50 lakh, will have to be filed under the new schedule AL that has been added to all ITR Forms, it said.
Talking about a series of action the IT Department has taken over the year, Archit Gupta, founder and chief executive officer of ClearTax, told Mint, "Last year, the income-tax department asked for bank account information and this year they have gone a step further and asked for net worth of taxpayers." The daily added that both individuals and HUFs will also have to provide details of pass-through income from business trust or investment fund in ITR form 2 and ITR form 2A.
Pass-through income is an income sent through a pass-through entity to its owners. It is not subject to tax at the corporate level but only at the level of an individual owner.
"While further instructions on how to value assets are awaited, taxpayers will find it challenging to value their assets themselves, especially jewellery and vehicles," Gupta told at a different occasion to ET.
The notification has classified liabilities as outstanding loans if any, and assets as movable and immovable in the traditional way of cash and, property and chattels respectively. However, amongst the movable assets, jewellery and vehicles (including boat, yacht and aircraft) will come to cause valuation difficulties, said Gupta. He explained that most salaried individuals usually do not maintain fair market value of jewellery owned or written down allowance (depreciation) of vehicles owned by them.
The ET added that the department has also introduced a new section to ITR-4S seeking code, nature and description of the three main businesses — activities or products that individuals earn from. The new ITR-4S can now be filed by partnership firms too. All they have to declare is the salary and interest paid to the partners.
"ITR-4S was earlier a succinct form, now with three additions specifying nature of business, salary and interest paid to partners (applicable only to firms) and schedule AL, it will need a lot more effort from those who preferred to file it," added Gupta.
In this year's Budget, the scope of ITR 4S was extended to bring professionals earning up to Rs. 50 lakh a year under presumptive tax, wherein, they have to pay taxes at a pre-determined rate of 50 percent of gross receipts. However, in the earlier tax filing process, the only requirement was profit declaration. The IT Department's newly introduced forms will now change this in case of multiple businesses, said the daily.