Senapathy, is a professional who works for an Indian MNC and earns a salary of about 45 Lacs a year. He also has rental income of Rs. 20 Lacs from his ancestral property from the financial year 2023-24 after his father’s demise. He has been investing in stocks and shares over the years. Senapathy has been mulling over the filing of his ITR for the FY 2023-24 and is in a fix. So far, since his main source of income was only salaries, ITR filing had been quite simple and he had done it on a DIY mode. For FY 2023-24, should Senapathy disclose his Assets as his Total income would cross the 50 Lac mark?
CONTEXT:
The Income Tax department requires certain class of taxpayers to disclose their assets & liabilities in their return of income filed. The reason behind this requirement is to detect taxpayers who own disproportionate assets compared to their declared source of income.
WHO MUST DISCLOSE:
Tax payers who have income from business or profession and file ITR-3 are mandatorily required to disclose their assets & liabilities. The other categories include:
a. Tax payers with total income more than Rs. 50 Lacs in the relevant FY
b. Tax payers who own Foreign Assets
WHAT MUST BE DISCLOSED:
While dealing with something as critical and as important as money, one should not take any chances. While the Income Tax Act provides for capital gain exemptions for re-investment in a property all these are claimed on a “self-declaration” mode while filing one’s Income Tax Returns. Even in genuine circumstances, if the assessee is not able to prove that conditions are met, the exemption may be withdrawn by the Assessing Officer.
50 Lac club!
Resident Assessees having total income of more than 50 lacs must disclose their assets & liabilities in Schedule AL of ITR. All assets including immovable properties (both self-acquired & inherited), movable properties including vehicles, Bank FDs, Stocks & Shares, Bullions, Insurance policies must be disclosed in Schedule AL. One must note that the immovable properties warrants a detailed disclosure. Any liabilities which pertain to the assets disclosed must also be included in Schedule AL. The assessees is expected to disclose all the assets at cost.
Foreign Assets
A resident individual/HUF who owns foreign assets (stocks & shares, immovable property, bank balances etc) must disclose the same in schedule FA. There is no threshold for the value of investments.
WHY MUST ONE DISCLOSE:
The Income Tax Department receives information from various sources and is armed with sufficient data base. ITR filing is a self-declaration compliance. Any incorrect, incomplete or missing disclosures will have its own repercussions. The act specifies stringent penalties for non-disclosure. For instance, a non-disclosure of foreign assets owned may attract a straight penalty of Rs. 10 Lacs from the AO (under the Sec 43 of Black Money Act, 2015).
Hence Senapathy must ensure that he files the correct ITR by disclosing his income, Assets & Liabilities properly. While ITR filing seems simple, it does involve some professional assistance while disclosing necessary particulars.
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