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Who should file Schedule AL in ITR

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The government has been introducing various changes to the income tax return (ITR) amendments for reporting of 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, the ITR has made it mandatory for taxpayers to disclose the assets and liabilities at the end of the year. Such taxpayer can fill in the details through the Schedule AL. Know the complete details of Schedule AL through here:

  1. What is Schedule AL?
  2. Who should file Schedule AL?
  3. Should my gross income be within the limit?
  4. Guidelines to file Schedule AL

1. 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.

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

The schedule AL is required to be filled by taxpayers filing ITR-2 which includes taxpayers having income above Rs 50 lakh. All other cases of taxpayers filing ITR-2 should also fill up schedule AL such as taxpayers holding directorships in any company. In a similar case, where total income exceeds Rs 50 lakh, taxpayer filing ITR-3 should also fill in schedule AL. This is in addition to the Balance Sheet of the business or profession to be filed in ITR-3.

3. 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. If the net income exceeds Rs 50 lakh, you must file Schedule AL.

For 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 Section 80C and 80D. In addition, she has been paying home loan instalments 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 instalments, she would not get the deduction on interest payment. 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.

4. Guidelines to file Schedule AL

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

  • 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 must provide details of their assets situated in India.

  • The term ‘assets’ include land; building 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.

  • 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.
  • You must include the details such as the cost price of such asset to the assessee.

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

    • a. The cost of such asset must be declared as per the cost provided by the previous owner plus the cost of any improvement incurred by the previous owner.

    b. If the cost of such 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:

    • a. Housing loan

    b. Vehicle loan

    c. Personal loan

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