ITR Filing: Importance Of Annexure AL And How The Rs 50 Lakh Limit Plays Out

Filing of the income tax return requires the disclosure of several items under different heads. Sometimes, even those who do not have to normally mention some details, have to disclose these because they fulfil some specific condition. This is especially true for the salaried who have income in excess of Rs 50 lakh, as they, along with others who fulfil the criteria, have to fill in an Annexure AL. This annexure requires that they show the value of assets and liabilities that they own. Here is a detailed look at this annexure and what is required for filing this.

This is an annexure which has to be filled in under specific circumstances by the tax payer, when they file their return. The term AL stands for assets and liabilities and the taxpayer has to file details of the various assets and liabilities that they have. The key part is the time or the circumstances when this has to be filed and this comes into force only when the income exceeds Rs 50 lakh in the financial year. This makes the applicability also very clear and this limit is for any individual taxpayer who exceeds this income limit. Those who have income below this limit would not need to fill it.

There is a limit of Rs 50 lakh that has been fixed for the applicability of filling in Annexure AL. The main question that arises for an individual is the manner in which this limit has to be calculated. The limit is not the gross total income, as this can be higher than the Rs 50 lakh, but it is the income that remains after the various deductions under Chapter VIA (Section 80C/Section 80D/Section 80G etc) has been considered. This means that the actual figure of the total income can be higher, but then the various deductions have been applied to see if the limit is being breached by the net figure. This requires a careful look at the various heads of income as well as the tax regime that a person has selected.

The nature of the assets that have to be disclosed has to be seen carefully so that nothing is missed out. This covers immovable property and would include land and buildings that are in a persons name. This is followed by financial assets which would include shares, securities, deposits, mutual funds and other similar investments that are of a financial nature. If there are any loans and advances that have been given to someone, then these too need to be disclosed. There are also many insurance policies that are present, which are in the nature of investments and these are the ones that have to be shown in this annexure. Apart from this, the cash in hand at the end of the financial year, plus jewellery and vehicles have to be shown. Even if one owns precious or semi precious stones, then these have to be disclosed, even if they are not set in jewellery. There is also space for moveable assets like yatchs, boats, bullion etc., that can be disclosed if one owns them. It is interesting that all these assets have to be shown at cost and if there is any improvement made to them, then the cost for this can also be added.

It is not just one side of the picture that has to be disclosed because there are likely to be liabilities that are present for an individual. These liabilities need to have been incurred for the purpose of buying the assets. Housing loans and vehicle loans are two common loans that lead to the build up of an asset, but they represent liabilities. Showing this also gives a better picture about the financing of the assets to the tax department and hence this is necessary.

Arnav Pandya is founder Moneyeduschool