Requirement to disclose domestic assets by high net-worth individuals in the income tax returns

The Income-Tax Department is zeroing in on high net-worth individuals, and wants them to disclose the details of their BL08_pg1_newtax_NE_1450921fassets in the country. A separate disclosure format, included in the income-tax return forms for assessment year 2013-14, wants details of movable assets (personal effects excluded) including vehicles, yachts, aircraft, bullion, jewellery, works of art and paintings. Also to be disclosed are details of financial assets such as bank balances, shares and insurance policies. Disclosure of immovable assets covers land and buildings owned by the individual.

e-filed returns

The new requirement is aimed at identifying taxpayers who own assets that are disproportionate to their known sources of income. This move will affect non-salaried individuals with a total income of over Rs 25 lakh in a financial year. It would also cover partners of partnership firms These disclosures will be essentially made in the e-filed tax returns. This is because the Government has reduced the income-threshold for mandatory e-filing of tax returns to Rs 5 lakh in a financial year.

Higher collections

The latest move requiring disclosure of domestic assets comes a year after the I-T Department mandated the disclosure of foreign assets (property and cash balances held abroad). “The introduction of disclosure of domestic assets (chargeable to wealth tax) in the income-tax return will help bolster tax collections and compel taxpayers to disclose their personal assets,” said Amit Maheshwari, Partner, Ashok Maheshwary & Associates, a firm of chartered accountants. The I-T Department has notified new tax return filing forms (ITR 1 to ITR 5) for assessment year 2013-14 for non-corporate taxpayers (not subject to tax audit or transfer pricing compliance).

Deadline

The deadline for filing the tax return in such cases is July 31. One of the significant changes to the newly notified tax return forms is the additional requirement of disclosure of Indian assets and liabilities in forms ITR 3 and ITR 4. ITR Form No 3 is applicable to ‘Individuals/HUFs being partners in firms and not carrying out business or profession under any proprietorship’. ITR Form 4 is applicable to ‘Individuals & HUFs having income from a proprietary business or profession’. Source: http://www.thehindubusinessline.com