Fill­ing New Tax Forms May Not be Easy

‘At cost’ cri­te­ria will com­pli­cate as­set dec­la­ra­tion, say ex­perts

The Economic Times - - Money - Chan­dralekha.Muk­erji@ times­group.com

Ben­galuru: The Cen­tral Board of Di­rect Taxes has re­leased in­struc­tions for the new ITR forms, but ex­perts be­lieve fill­ing up the new sched­ule AL (as­sets and li­a­bil­i­ties) could prove chal­leng­ing for tax­pay­ers. The new sec­tion AL is manda­tory for in­di­vid­u­als and HUFs earn­ing more than ₹ 50 lakh a year and re­quires the tax­payer to de­clare all move­able and im­mov­able as­sets. These as­sets have to be de­clared at cost, i.e. the price at which they were ac­quired by the tax­payer.

This, ex­perts feel will be a huge chal­lenge as as­sets ap­pre­ci­ate or de- pre­ci­ate. There­fore, the dec­la­ra­tions would not paint a fair pic­ture of the net worth of a per­son. “A lux­ury car may have been ac­quired at a cer­tain price but de­pre­ci­ates as soon as it turns around the cor­ner. It would be un­fair to book it at cost price. Sim­i­larly, jewellery bought, say, 10 years ago would have mul­ti­plied many fold. Show­ing it at cost price will de­feat the pur­pose of declar­ing the net worth,” says Ar­chit Gupta, founder, ClearTax.in.

In the wealth tax dec­la­ra­tions ev­ery­thing was at fair mar­ket value and there­fore there was a method to it and val­u­a­tion was less con­fus­ing. “Al­though wealth tax has been abol­ished, tax au­thor­i­ties in­tend to track the as­sets you own so that there is no ac­cu­mu­la­tion of un­ac­counted wealth. How­ever, the ‘at cost’ cri­te­ria will make things more com­pli­cated,” says Kuldip Ku­mar, ex­ec­u­tive di­rec­tor, Tax, PwC In­dia.

Ear­lier such ex­ten­sive dec­la­ra­tions were part of the lengthy ITR-4 form where most of the as­sets owned were in­cluded as busi­ness as­sets. How­ever, this year salaried in­di­vid­u­als too will have to com­ply to this re­quire­ment via ITR-1, 2, 2A. “Peo­ple who oth­er­wise do not have high in­come, but end up hav­ing a to­tal in­come higher than ₹ 50 lakh this year only, due to say, a prop­erty sale or wind­fall will also be re­quired to fill this sched­ule,” points out Gupta.

The ‘at cost’ dec­la­ra­tion ap­plies to in­her­ited as­sets to. It will be most chal­leng­ing to de­clare val­ues of these as­sets, es­pe­cially, if it has been passed down from more than a gen­er­a­tion ago.

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