Schedule AL in ITR: Declaration of Assets & Liabilities
- Rashmita Choudhary
- 3 days ago
- 7 min read
The government has been implementing a number of modifications to the income tax return (ITR) that require taxpayers to report their assets and liabilities. A balance sheet detailing assets and liabilities must typically be filed in the ITR by a taxpayer who conducts business or a profession. Separately, the ITR has mandated that taxpayers reveal their assets and liabilities at the end of the year in some particular circumstances, including for salaried individuals. These taxpayers can use Schedule AL to complete the information. In this article, we will explain the concept of Schedule AL and list the taxpayers who must file it.
Table of Contents
What is Schedule AL?
With the help of Schedule AL, a taxpayer can reveal assets and the associated obligations in their ITR. In the Schedule AL, the values of the assets and liabilities as of the end of the year must be reported. The taxpayer's financial assets, movable property, and immovable property are among the assets that must be revealed. All of the taxpayer's obligations with regard to these assets are included in the liabilities.
Details to be Disclosed in Schedule AL
Immovable assets: Land and building
Movable assets: Bank deposits, insurance policies, shares and securities, loans and advances given, jewellery, bullion, cash in hand, vehicles, boats, cash in hand, aircraft etc.
Jewellery: (a) Ornaments made out of precious metals such as gold, silver, platinum etc. or an alloy that contains such precious metals. Any ornament worked or not worked/sewn or not sewn into any apparel is also considered an ornament. (b) Precious or semi-precious stones, whether or not set in any furniture, utensils, articles, etc or worked or sewn into an apparel.
Who Needs to File Schedule AL?
Hindu undivided families (HUF) and individuals with annual incomes under Rs 50 lakh are exempt from filing schedule AL. However, the following persons should file it:
Individuals and HUFs who earn more than Rs 50 lakh a year.
HUFs and people conducting any kind of business or occupation must provide information about their assets and liabilities using a balance sheet.
All individuals and HUFs with taxable incomes over Rs 50 lakhs per year must select either ITR-2 (not having income from business and profession) or ITR-3 (having income from business and profession) and complete Schedule AL: Asset and Liability. For taxpayers filing ITR 3, they must also complete Schedule AL in the format provided, in addition to providing information about their assets and liabilities on the balance sheet.
Filing Schedule AL: Gross Income or Net Income
To avoid the requirements of schedule AL, your net income (income after all deductions) under Chapter VI-A must fall within the designated limit of Rs 50 lakh. Therefore, you must file Schedule AL if your net income is more than Rs 50 lakh.
Illustration: X earns a gross income of Rs. 53 lakhs per annum. She does, however, receive a Rs 1.5 lakh tax deduction for her investments and expenses under Sections 80C and 80D. She also qualifies for the Rs 1.5 lakh annual discount on home loan interest since she has been making her loan payments on time. Her net income drops to Rs 50 lakh as a result. She no longer needs to include Schedule AL in her ITR. She wouldn't be eligible for the interest payment deduction if she didn't have to make the house loan installment payments. The net income in that scenario would be Rs 51.5 lakh. This revenue would be more than the Rs 50 lakh limit. X would therefore be required to submit Schedule AL.
Guidelines to File Schedule AL
The following rules must be followed when submitting Schedule AL:
Your assets must be disclosed at cost. You can also include any expenses related to the asset's improvement.
Details of assets located solely in India must be provided by non-residents and non-normal residents with incomes over 50 lakhs.
If the asset is not covered by the aforementioned provision and is instead a gift, will, or other mode specified in Section 49(1):
Such an asset's cost must be reported using the amount that the prior owner supplied as well as the cost of any improvements that were made by them.
An asset's worth can be calculated using the circle rate or bullion rate as of the assessee's acquisition date if the asset's cost cannot be determined and no wealth tax return was submitted for it.
When it comes to liabilities, all debts incurred in connection with the assets, including:
Housing loans
Vehicle loans
Reporting of Movable Property in Schedule AL
The following points are to be considered when reporting assets included in movable property in Schedule AL:
Jewellery or Bullion: Declare the value at cost and any jewellery that was given as a present. The value may be stated as the purchase price paid to the prior owner; if this is not possible, the value as of April 1, 2001, may be used.
Vehicles: Unless they are sold or wrecked, all automobiles, motorcycles, cars, boats, and aircraft must be declared at cost.
Financial Assets:
Bank: In addition to the amount in your savings account, you should also include the amount in any bank-held fixed deposits, recurring deposits, PPFs, etc.
Shares and Securities: List all of your investments in bonds, debentures, mutual funds, equity shares, and EPF balances.
Insurance Policies: Generally speaking, pure term insurance offers no survival benefits. On the other hand, other insurance plans that fall under the category of investment-cum insurance pay out after a certain amount of time. Under this timetable, you can so submit all of the premiums paid up to this point in the year.
Reporting of Immovable Property in Schedule AL
When reporting immovable property in Schedule AL, keep the following things in mind:
Land & Buildings: Make sure to provide information about all the buildings and land you possess as of March 31, 2024. Declare the asset's value at all costs, including any improvements made. You can provide information and value about jointly owned property up to the amount of your share.
Property under Construction: You are not required to declare the property as immovable property if you have not yet taken ownership of it. Nonetheless, the sum paid to the constructor is displayed under Loans and Advances.
Property Received as Gift: You can demonstrate the expenses incurred to the previous owner of property obtained as a gift or as part of an ancestral will. Additionally, if the property was purchased before April 1, 2001, and the cost cannot be ascertained, the registered valuer's value as of that date might be supplied.
Reporting of Liabilities in Schedule AL
Liabilities must only be disclosed if they are incurred in connection with the assets listed above. For example, since the asset's value is not stated above, information about any personal or consumer loans you have taken out to purchase electronic goods must be disclosed.
Conclusion
Black money has been causing problems for every nation on the planet. Governments continue to enact new legislation every year with the intention of targeting those involved. The existence of black money in the economy does more than only make the gap between the rich and the poor wider. Therefore, it is not surprising that the government and departments are always trying to stop the flow of black money by implementing new regulations each year. Schedule AL is one of these regulatory requirements. Keep in mind that Schedule AL is not a comprehensive list. It does not offer coverage for every asset. For instance, it will be challenging to cover every region because there is no dedicated field to identify certain asset classes, such as investments in EPF, NPS, post office balances, cooperative societies, and digital assets (cryptocurrencies).
FAQ
Q1. Is the limit to file Schedule AL of Rs. 50 lakhs before or after deductions?
According to the recommendations, income will be taken into account after Chapter VI-A deductions in order to determine the limit. For example, your total income was Rs. 51,50,000 before you claimed the deduction. To claim a deduction under Section 80 C, Rs. 1,50,000 has to be deposited into the PPF. You would now have Rs. 50 lakhs (51,50,000-1,50,000) in net taxable income. You do not have to fill out Schedule AL because the sum is less than 50 lakhs.
Q2. What if the total income is exactly Rs. 50 lakhs?
An exact income of Rs. 50 lakh means that filing Schedule AL is not needed. If a taxpayer's total income surpasses Rs. 50 lakh, they must provide Schedule AL.
Q3. Is declaring assets in ITR 2 mandatory?
No, it is not mandatory unless your total income crosses the threshold of Rs. 50 lakhs. Therefore, you must only fill out Schedule Assets and Liabilities if your income exceeds Rs. 50 lakhs.
Q4. How do I report insurance policies in Schedule AL?
There are typically no survival advantages associated with pure term insurance. On the other hand, other insurance plans that fall under the category of investment-cum insurance pay out after a certain amount of time. Under this timetable, you can submit all of the premiums paid up to this point in the year.
Q5. Does Schedule AL include foreign assets?
Yes, any assets you own outside of India have to be listed on Schedule AL as well.
Q6. What are the drawbacks of Schedule AL?
The following problems could arise for taxpayers while filing schedule AL:
The cost of the asset is frequently unavailable.
Is it necessary to disclose personal assets as well?
Given the growing amount of disclosure obligations, compliance appears to be becoming more difficult every day.
Q7. Can I file ITR 1 if I have a salary and interest income exceeding Rs.50 lakh after deductions?
No, even though you simply have salary and interest income, you must submit an ITR-2 rather than an ITR-1 since your income exceeds Rs. 50 lakh.
Q8. My parents have given me gold under will or gift, but its cost of acquisition of this hold is unknown. How to declare this in Schedule AL?
You can rely on Schedule AL to determine the fair value as of April 1, 2001 if the gold gifted by your parents was bought before that date and the purchase price is not known.
Q9. I plan to buy a flat that is still under construction, and possession will be given after four years. Should I declare this under immovable property?
The possession certificate has not yet been issued, so you are not required to declare it under immovable property. Loans and advances can be stated to declare the amount previously paid.
Q10. Is schedule AL applicable for non-residents also?
Yes, if the taxable income exceeds Rs. 50,000,000, Schedule Al applies to all individuals and HUFs, regardless of residential status.
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