Who should File Schedule AL in ITR?

The government has been introducing various changes to the income tax return (ITR) amendments for reporting assets and liabilities by taxpayers.

Generally, a taxpayer carrying on business or profession is required to file details of assets and liabilities through a Balance Sheet in the ITR. 

Separately, in certain specific cases, even for salaried individuals, the ITR has made it mandatory for taxpayers to disclose their assets and liabilities at the end of the year. Such taxpayers can fill in the details through Schedule AL.

What is Schedule AL?

Schedule AL enables a taxpayer to disclose assets and the corresponding liabilities in the ITR filed by the taxpayer. The values of the assets and liabilities standing at the end of the year are required to be disclosed in the schedule AL. The assets to be disclosed include immovable property, movable property, and financial assets owned by the taxpayer. The liabilities include all liabilities of the taxpayer in relation to such assets.

Who should file Schedule AL?

Individuals and Hindu undivided families (HUF) having total income below Rs 50 lakh are not required to file schedule AL.

However, individuals and HUFs having an annual income exceeding Rs 50 lakh must mandatorily file Schedule AL. 
Also, individuals and HUFs carrying on any business or profession are required to file details of assets and liabilities through a Balance Sheet.

All individuals and HUF having annual taxable income exceeding Rs 50 lakhs have to choose ITR-2 (Not having income from business and profession) or ITR 3 (Having income from Business and profession) and fill Schedule AL - Asset and liability. 

For taxpayers filing ITR 3 along with providing details of assets and liabilities in the Balance sheet, They will also have to fill the details in Schedule AL in the provided format.

Why is it mandatory to file Schedule AL for some taxpayers?

Previously, there have been many instances where the taxpayers assets do not match with the income earned by them. 

So to keep the check on the assets acquired in parlance to the income earned, the income tax department has made it mandatory to file schedule AL for high-income earners with gross taxable income of more than Rs.50 lakh.

Should my gross income be within the limit?

Your income after all the deductions (net income) under Chapter-VI-A must be within the specified limit of Rs 50 lakh to escape the requirement of schedule AL.

Hence, if the net income exceeds Rs 50 lakh, you must file Schedule AL.

For a better understanding, consider the case of Pinky Sharma. Her gross income per annum is Rs 53 lakh. However, she gets a tax deduction of Rs 1.5 lakh for investments and expenditures under Sections 80C and 80D. In addition, she has been paying home loan installments and qualifies for the deduction on home loan interest of Rs 1.5 lakh per annum. This brings down her net income to Rs 50 lakh. Now, she is not required to file Schedule AL in her ITR.

If she did not have to pay the home loan installments, she would not get the deduction on interest payments. In that case, the net income would amount to Rs 51.5 lakh. This income would exceed the threshold limit of Rs 50 lakh. Consequently, it would be mandatory for Pinky to file Schedule AL.

Guidelines to file Schedule AL

Here are a few guidelines you must comply with while filing Schedule AL: 

• The term ‘assets’ include land; buildings along with immovable assets; financial assets such as shares, securities, and deposits; loans and advances; insurance policies; cash in hand; jewellery; vehicles; movable assets such as yachts, aircraft, and boats; and bullion.
• You must disclose your assets at cost. Also, you can include any cost of improvement incurred on the asset.
• Non-residents and not ordinarily resident individuals having income above 50 lakhs need to provide details of their assets situated only in India.
• Jewellery includes ornaments made of gold, silver, platinum, any other precious metal, or an alloy made of one or more of such precious metals. It may or may not contain precious or semi-precious stones.
• Details of precious or semi-precious stones, whether or not set in any utensil, furniture, or any other apparel.

If the asset is a gift, will, or any other mode in Section 49(1) and not covered by the above clause:

• The cost of such an asset must be declared as per the cost provided by the previous owner plus the cost of any improvement incurred by the previous owner.
• If the cost of such an asset is not ascertainable and no wealth tax return was filed for that asset, the value can be estimated at the circle rate or bullion rate as per the date of acquisition by the assessee.

In the case of liabilities, all liabilities incurred in relation to the assets should be reported such as:

• Housing loan
• Vehicle loan

Important Points to be noted while disclosing in Schedule AL

Reporting of Immovable Property

1. Ensure you provide details of all Land and buildings that you own as of 31st Mar 2024 
2. Declare the value of the asset at any cost and any improvement done the same
3. In the case of Jointly owned Property, you can furnish details and value to the extent of your share
4. Property received under Gift, Will of ancestral property, you can show the cost incurred to the previous owner. And if the property is bought before 1st April 2001 and cost cannot be determined, then value as of 1st April 2001 as determined by the registered valuer can be provided
5. Property under construction - If you have not yet got possession of the property then you need not declare the same under immovable property. However, the amount given to the builder can be shown under Loans and advances

Reporting of Movable Property

1. Jewellery or Bullion  - Disclose value at cost and jewellery received as gift, value can be shown as purchase cost incurred to the previous owner, if determination of such purchase cost is difficult, then value as of 1st April 2001 can be used.
2. Vehicles - All vehicles, motorbikes, Cars, Boats, and Aircraft need to be declared at cost unless such vehicles are scrapped or sold
3. Financial Assets
   1. Bank - You should include not only the balance lying in your savings bank account but also include balance lying in Fixed Deposit, Recurring deposit, PPF etc., with Banks.
   2. Shares and Securities - Declare all your investments in Mutual funds, Equity shares, Bonds, Debentures, and EPF Balances.
   3. Insurance Policies - Pure Term Insurance normally do not carry any survival benefits. However, Other insurance policies which are in the nature of investment cum insurance provide a payout after a specific duration. Thus you can provide all the premiums paid till the year under this schedule.
4. Liabilities - Only liabilities which are incurred in relation to the assets declared above need to be provided. i.e., say if you have taken some personal loan and consumer loan to buy electronic products, details of such loan need to be provided since the value of the asset is not declared above. 

It is also important to note that Schedule AL is not an exhaustive list. It does not provide to cover all the assets. For eg. Investment in EPF, NPS, Balance in Post office, Cooperative society, and Investment in Digital Assets (Cryptocurrencies), Since there is no specific field to declare these asset classes, it will be difficult to cover all the areas.