Income tax return filing: Requirements of disclosure of assets owned by you in ITR

ITR filing: The income tax department wants certain taxpayers to report various assets and liabilities to detect cases of disproportionate assets owned by a taxpayer compared to his known sources of income. The report can be divided into two parts: first, those taxpayers with incomes over 50 lakh rupees, and second, foreign assets owned by resident taxpayers.

Let us discuss the first requirement in detail. It applies to all individuals and HUFs, whether residents or non-residents.

a) To whom this requirement is applicable: It is not that every taxpayer has to report details of his assets and liabilities. Reporting the assets and liabilities is only relevant if your taxable income exceeds ₹50 lakh for the year. So, the eligible people to file the ITR 1 (Sahaj) or ITR 4 (Sugam) do not have to provide these details. Moreover, if you are engaged in a business and thus furnishing your business balance sheet in the ITR, you must furnish only the details of the assets that have not already been disclosed in the balance sheet.

b) Are the requirements the same for all the forms? The format of disclosure of assets and liabilities is the same for all the ITRs except that from ITR 3, you must submit the details of interest in the firm or any Association of Persons (AOP) where you are a partner or a member. You must furnish details of specified movable and immovable assets and liabilities as of 31st March 2024 under the AL schedule, wherever situated. So, any asset disposed of during the year will not form part of the schedule.

c) Disclosure for immovable properties: You must disclose details of immovable properties, i.e. land and buildings you own in scheduled AL. While submitting the details of immovable properties, you have to provide a description, cost, and address of the property. Please note that it is not that you have to disclose only the assets purchased by you, but you also have to disclose the details of any immovable asset received as a gift or inherited by you.

So, if you own a house in your ancestral village that you inherited, you have to furnish the details here. You must provide such information even if you are a joint property owner. Disclosing the cost in such cases may pose some problems as you may not have the details of the cost for which the person from whom you had inherited or received the same as a gift had purchased it.

In such a case, to comply with the requirement and as a safe measure, you can indicate the market value as of 1st April 2001, as this is acceptable as the cost of acquisition for the capital gains calculation purposes in case the assets were acquired by you before that date. If any money is borrowed for the immovable property or is borrowed on the security of the asset, the same also needs to be disclosed in the schedule.

d) Disclosure of movable assets: Under the movable properties, the assets to be disclosed include financial assets like cash in hand, bank balances, shares and securities, insurance policies, loans and advances, and other movable asset like jewellery, bullion, vehicles, yachts, boats and aircraft, work of art etc. as on 31 st March 2024. Under the category of jewellery it is not only jewellery but also the bullion held in raw form that you are required to disclose.

So, if you own any gold bars or coins, their cost must be disclosed in the schedule. The same principle discussed above would apply to inherited assets. While revealing details of bank balances, you have to provide not only details of all savings accounts but also the details of all current accounts, recurring and fixed deposits, and details of your loan account in case the same has a positive balance. In case of shares and securities received as gifts or inheritances and where you do not know the cost, the market price as of 1st April 2001 may be furnished as a safeguard.

Traditional Insurance policies may be treated as investments. Still, term insurance plans cannot be treated as investments, as you do not get any money back if you survive the policy term.

However, since no distinction is made here between traditional policies and term plans, I would advise you to include the premiums paid to date on term plans as well under the head insurance policies. You are also required to disclose details of vehicles, yachts, boats, aircraft, etc., owned by you, so the vehicles that are not used but have not been discarded yet or are being maintained as antique pieces also need to be disclosed.

The second requirement applicable to respect foreign assets owned by resident taxpayers is to check hawala transactions and money laundering; this requirement has been brought into the statute book. As discussed earlier, this requirement applies only to resident taxpayers and concerns assets owned outside India. This will apply to all your investments and bank accounts maintained outside India. If you have invested in foreign stocks or mutual funds directly, you need to disclose the particulars. However, if you are exposed to foreign stocks through Indian mutual funds, you are not covered here.

Failure to disclose the details properly of foreign assets mandatorily attracts a penalty of ₹10 lakh for every year of default under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015; the only exception is for a foreign bank account whose balance was less than equivalent of ₹5 lakh during the year.So please be very careful while filing your ITR in case you own any foreign asset, whether you bought it or inherited it.

Balwant Jain is a tax and investment expert and can be reached at jainbalwant@gmail.com and @jainbalwant on X.