tax return filing, complications in tax return filings, tax,

*Filing income- tax returns gets more complicated*

Filing income- tax returns is not a pleasant job for most, even for those

who have no income to show other than salaries. And, the continuous changes

in the income- tax returns form, often, makes the filing process more

complicated.

• One has to be extremely careful about filling the various boxes in the Income Tax Return ( ITR) form and ensure that it matches the details mentioned in the income certificates. And, with filing possible only on-line, there is no scope for any error, or else you can expect a notice from the income tax department.
• This year might be a challenge for those who earn more than ₹ 50 lakh. In addition to details of salary and various exemptions, these individuals also have to disclose the value of the non- financial assets they own. This value has to be the cost or acquisition value. The disclosures include particulars of assets like land, buildings, cash in hand, jewellery, bullion, aircraft, yachts and boats.
• Another change this year is that individual taxpayers also need to report the details of the pass through income received from business trusts or/ and investment funds.
• The government wants to know whether your non-financial assets are in proportionate to your income or you are earning  black money.
• Individuals have to face difficulties because non maintenence of records of jewellry which they received in gifts.

“A threshold limit for each category of asset for disclosure purposes would

provide an administrative relief in case assets below a prescribed

threshold are exempted from disclosure requirement. For instance, in the

past, only cash value in excess of ₹ 50,000 was required to be considered

for wealth tax purposes,’’ Ghose says

The challenge is that most people don’t maintain records of purchases.

According to the rules, salaried or individual taxpayers are not required

to maintain books of accounts. This is applicable only to those who have

business income. Now, to show the value of your assets it might become

necessary to maintain records of your purchases.

It becomes even more challenging in case of ancestral property or gifts

that you get through inheritance.

How can you estimate the value of something that has been purchased years

ago? The instructions say that in case of inherited assets, the value in

the hands of the previous owner can be mentioned. In case that is also not

known, then what value needs to be reported should be clarified, says

Kuldip Kumar, partner and leader Personal Tax, PwC India.

“It can happen that you inherit jewellery from your parents, but they had

inherited the same from their parents.

In such a case, it will become difficult to ascertain the value of the

jewellery. As an alternative, the taxpayer should be allowed to state the

market value of the jewellery when the taxpayer became the owner of such

jewellery, similar to how it is allowed in case of calculating capital

gains,’’ Kumar adds.

If you have inherited the asset, then determination of the value would be

difficult, according to Maheshwari . An alternative could be to show the

value of the asset as ‘0’. In case of inheritance, as there is no tax, this

alternative can definitely be exercised.

If the asset was purchased or acquired before 1981, you can value it

according to the inflation index of 1981. If it is acquired after 1981, you

can give an estimate or approximate value. Again the procedure used in

calculating capital gains.

“The government’s primary motive is that people should not get away by non-

disclosing. For instance, how can someone with an income of ₹ 10 lakh, own

property worth ₹ 5 crore? The intent of the government is to come down

heavily on the evaders. The message from the top seems to be that if you

evade taxes, then you will be on our radar and can be called for scrutiny,”

Maheshwari says.

Given the robust system of tracing financial transactions, the government’s

fears of mis- reporting of assets may be a bit exaggerated, Kumar says. “

The additional disclosure will only increase the obligation for existing

high- income group tax- payers. Now such tax- payers will have to trace

and/ or maintain records of all assets they buy, like jewellery, etc. What

is required instead is to widen the tax base,’’ he adds.

Another issue that requires clarification is how to avoid double disclosure

of assets, points out Ghose. Currently, for residents and ordinarily

residents, foreign assets have to be disclosed in aspecific schedule. But

in the newly introduced assets and liability schedule, if these foreign

assets have to be disclosed again, it will lead to duplication in

reporting. Hence, a clarification is required that the new schedule should

cover only domestic assets and liabilities.

One positive consequence is that meeting the deadline of filing tax returns

for financial year 2015- 16 will be easier as the income tax department has

already notified the various ITR forms. This will allow tax- payers to file

returns from April, well in time before the July 31 deadline.

Those with annual income of more than ₹ 50 lakh will have to furnish a lot

of additional details

The ITR- 1 Sahaj form, meant for individual taxpayers, has a new reporting

schedule titled Details of Asset and Liability CONFUSION OVER ASSET VALUE

DECLARATION

[1]The schedule mentions that the amount has to be mentioned at cost;

experts suggest value at the time of acquiring the asset has to be

mentioned [1]In the case of assets prior to 1981, one option is to declare

the value at 1981- level because that is when the cost inflation index

started [1]For assets purchased after 1981, an estimate has to be given of

the value [1]In the case of inherited property, the value of the property

when it was acquired by the previous owner has to be taken into account [1]If

that is not known, an alternative is to assume the value as ‘ 0’.