Come the tax return filing season, seeking more and more information in the ITR forms has become a rule rather than an exception for tax authorities. Since 2015 though, the tax department’s target has been the high-income and the rich/affluent group.

Towards this end, disclosure requirements related to foreign income and assets were introduced in 2015.

Now, return forms for the just concluded financial year 2015-16 have been put out recently with a similar focus on extracting more information and disclosures from the affluent.

Here, we discuss those changes that will be of relevance to individual assessees filing ITR1, 2A and 2 return forms.

Prima facie, the number of pages in each of these forms has increased by one page this year.

This is because of additional information required under three different schedules — Schedule TCS (Tax Collection at Source), Schedule AL (Asset and Liability) and Schedule PTI (Pass Through Income).

While the first two find a place in all the three forms — ITR 1, 2A and 2, disclosure under Schedule PTI is required only in ITRs 2A and 2.

Tax collected at source

Similar to tax deduction at source (TDS) on certain incomes you receive, such as salaries, interest income above a certain threshold from fixed deposits, recurring deposits, etc, there are certain high value transactions that require tax collection at source at the time of payment from your hands.

For example, 1 per cent of the sale consideration is collected as tax from you by the seller if you buy jewellery exceeding ₹5 lakh in cash.

Budget 2016 also announced a 1 per cent tax on purchase of luxury cars over ₹10 lakh.

These are now required to be disclosed in the ITR forms. Just like Form 16 or Form 16 A issued by the deductor for TDS, the collector in this case will issue a Form 27D.

Using this, you can fill in the details asked for in Schedule TCS, such as name of the collector, tax collection account number and amount collected. You also can claim credit for this payment along with other advance tax, TDS and self-assessment tax payments in the return form.

Earlier, there was no provision in the return form to claim credit for such tax collected at source.

Secondly, those who earn income out of investments in certain business trusts or investment funds (for example, certain venture capital funds and private equity funds) will now have to comply with new disclosure norms on the pass through incomes received from these funds.

Pass through income

These incomes were given ‘pass through’ status in last year’s Budget. This broadly implies that the income will be taxed in the hands of the investors rather than in the hands of the fund itself.

Schedule PTI requires details of the name and PAN number of the business trust/investment fund and heads of income — house property, capital gains, other sources — under which the income has been received.

Details of income claimed to be exempt under these heads are also required. While the ITRs 2 and 2A specifically mention that the instructions must be referred to, perhaps, get greater clarity before filling in this schedule, the instruction manual is yet to be released.

Disclosure of assets, liabilities

The third additional requirement is the one that has been debated widely — Schedule AL requiring disclosure of certain assets and liabilities of those earning an income of over ₹50 lakh. With the abolition of wealth tax, this disclosure requirement has been brought in with a view to keep tabs on such assets as land and building, jewellery, bullion, vehicles, yachts, aircrafts, etc, owned by the wealthy.

But the requirement to disclose their values at cost has invited a lot of criticism, given that many assessees may not have records of the purchase price or would have inherited some of the assets or received them as gifts. One needs to wait and watch if there will be any modifications to the disclosure requirements on this front before the return filing season gathers steam.

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