Schedule AL was introduced in 2016 after the discontinuation of the wealth tax. Prakash Hegde, chartered accountant at Acer Tax & Corporate Services LLP, explains, “The government wanted a monitoring system to check if the value of a taxpayer’s assets corresponds to the income earned by them. Thus, Schedule AL was introduced.”
To help taxpayers understand Schedule AL, Mint presents a Q&A guide:
Which assets should I declare?
Declare all financial and non-financial assets, including cash. This includes jewellery, vehicles, archaeological collections, drawings, paintings, sculptures, and real estate. Schedule AL has separate columns for each category.
Where should I declare assets like provident funds, National Pension Scheme, and alternative investments like Reits, cryptocurrencies, and P2P?
Experts suggest declaring these under the shares and securities column. Mayank Mohanka, founder director at TaxAaram India, says, “Tax laws don’t define securities specifically, so it’s safe to declare PF, NPS, or REITs under this category.”
Consolidate investments in stocks, mutual funds, NPS, EPF, government securities, and derivatives under this section. Declare derivatives bought on 31 March, not for the entire year.
Should I declare the value of my assets as per current market value?
No, declare assets at their purchase cost. Hegde points out, “Taxpayers often mistakenly declare the fair market value. For insurance policies, declare the premium paid, and for cars, declare the original purchase amount, regardless of age.”
For mutual funds, stocks, fixed deposits, and other investments, declare the total amount invested during the financial year, not the year-end value. If an investment was sold in the same year it was bought, its cost of acquisition is not to be declared.
“For bank savings account and cash, balance as on 31 March needs to be declared,” Hegde added.
Should the amount for liabilities also be the original loan amount?
No liabilities or loan amounts are to be declared as per the outstanding loan as of 31 March in a year. This means the loan amount will decrease each year.
“Some taxpayers worry that this could lead to a mismatch with their income. For instance, if someone bought a car worth ₹50 lakh with a loan of ₹40 lakh, the loan value in the fourth or fifth year will become small, but the value of the car will still be ₹50 lakh. It’s not a matter of concern as even if the IT department questions the taxpayer regarding affordability of the asset, they can show past declarations to justify the mismatch,” said Hegde.
It should be noted only those loans are to be declared with which an asset is bought. This would mean personal loan or credit card outstanding, unless used to purchase an asset, is not to be disclosed.
I inherited property through a Will. I didn’t pay for it. What should I declare in the amount?
Declare inherited or gifted properties at the cost for which the previous owner bought them. If the original value is unavailable, use the circle rate on the acquisition date or when the circle rate was introduced.
Will inherited property amounts that exceed my income lead to a mismatch?
No, it won’t. Mohanka notes that the tax department may ask for an explanation, but this can be justified with documents.
Should foreign assets be declared in Schedule AL?
Yes, declare foreign assets in both Schedule FA and AL. Mohanka clarifies, “In schedule FA, foreign assets are declared as per calendar year, but in AL it’s as per financial year. Further, if you held a stock even for one day, it should be declared in schedule FA, whereas such a stock is not to be declared in Schedule AL. Only those assets that are held as on 31 March are to be declared.”
Hegde added that the value to be declared is also different in the two schedules. “FA schedule asks for current market value along with cost of acquisition whereas AL only asks for the latter.”
I invest in my spouse’s name. He’s the sole owner and his income is lower than ₹50 lakh, which means he doesn’t fill AL schedule. Do I have to declare them?
Hegde said such cases attract the clubbing provision for tax on income, so the taxpayer who invests with his income should declare it in his ITR.
Karan Batra, managing partner of the Chartered Club, agreed and added that this especially applies to those cases when the spouse who has paid the amount is a joint owner.
“When the spouses are joint owners in a house property but one of them has fully paid the purchase amount, he or she should declare the full property cost in their AL. In cases where the spouse who has paid is not a co-owner or a joint holder, which is usually the case in FDs or MFs, he would have gifted the asset to his spouse and does not have to report the asset in his AL,” he said.
I am a business professional and declare AL in the balance sheet. Should I still declare it in ITR?
No, assets declared in the business balance sheet are not required in Schedule AL. For example, if a business owner’s car is part of the enterprise’s balance sheet, it doesn’t need to be declared in AL. However, personal assets like a house must be declared.
Only the assets that have been declared in the balance sheet of the business are not required to be filled in schedule AL. For instance, if a business owner’s car is part of his enterprise’s balance sheet, it will not be declared in AL. But, if he has a house in his name, it will be declared in AL.
Is there a penalty for not declaring assets or partial declaration?
Currently, there is no specific penalty for non-disclosure in Schedule AL.
“This is unlike the FA schedule which gets scrutinised under the Black Money Act and attracts a penalty of ₹10 lakh. That said, I recommend eligible taxpayers correctly declare all their assets and liabilities as it creates a trail. If the tax department questions you with regard to the value or ownership of any of your assets in the future, you will have proof to show that you have been declaring it and the tax department has accepted your declarations in the past,” said Hegde.
Batra warns that the IT department may penalize wrong disclosure or no disclosure of assets. “The penalty ranges from ₹25,000-50,000 depending on whether non-declaration led to tax evasion or not,” he said.