Income Tax efiling: Here – s what you need to disclose now in tax return forms for Financial Year 2016-17 – The Financial Express, tax return efiling.#Tax #return #efiling

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Income Tax efiling: Here s what you need to disclose now in tax return forms for Financial Year 2016-17

Amidst all the GST excitement and curiosity, there has been a lot of focus on ‘taxes’ in the past few months. Tax-related discussions seem to be the flavour of the season. The timing for this couldn’t be better – with 31st July as the personal Income-tax Return (ITR) filing deadline. The government is hoping for a better ITR filing compliance this year. However, for an individual tax payer, income tax efiling or filing an ITR can be a complicated process with all the detailed reporting requirements. To help you understand these requirements, below are a few important details that need to be provided in the ITR:

Reporting of bank accounts

Irrespective of the residential status, there is a mandatory requirement for taxpayers to report all bank accounts (whether savings or current) held by them in India at anytime during the period 1 April 2016 to 31 March 2017 in the ITR for the Financial Year 2016-17.

However, details of any dormant bank account, i.e. an account which is not operational for more than 3 years, is not required to be reported in the ITR.

Until last year, non-resident taxpayers were not required to provide details of bank accounts outside India in the ITR. However, in the new ITR forms for the Financial Year 2016-17, there is a mandatory requirement to provide details of bank accounts held by non-resident taxpayers outside India if such non-resident taxpayers do not have Indian bank account.

Bank account-related details required to be provided in the ITR are IFSC Code of the bank (SWIFT/IBAN in case of foreign bank), name of the bank, account number and country of location (in case of foreign bank).

Tax payers are also required to indicate the bank account in which they would like to receive the tax refund if any from the department.

Cash deposited 9 November 2016 to 30 December 2016

Post demonetisation, as a follow up step towards greater tax transparency, taxpayers are required to report cash deposited in Indian bank accounts during the period of demonetisation (i.e. from 9 November 2016 to 30 December 2016). However, the said disclosure is required if the aggregate amount of cash deposited by the taxpayer during the period of demonetisation is Rs 2 lakh or more.

To further curb corruption and black money, income-tax authorities intend to create a single database for all its taxpayers. As a step forward, with effect from 1 July 2017, it is mandatory for all taxpayers who are eligible to obtain Aadhaar to report their 12 digit Aadhaar number in the ITR. Taxpayers who have applied for Aadhaar but have not been allotted the Aadhaar number till the ITR filing are required to quote 28 digit Aadhaar enrolment ID in the ITR.

Income-tax authorities have also made quoting of Aadhaar number mandatory while filing an application for allotment of Permanent Account Number (PAN).

Reporting of assets and liabilities (Schedule AL)

Taxpayers having total income of more than Rs 50 lakh have to report specified assets and corresponding liabilities held by them at the end of the year (i.e. 31 March 2017) in the ITR.

Until last year, the taxpayers were only required to disclose assets such as immovable properties, cash in hand, jewellery, vehicles etc. However, this year the income-tax authorities have widened the reporting requirements taxpayers are now also required to report assets such as bank accounts (including all deposits), archaeological collections, shares and securities, insurance policies, loan and advances given etc.

Such assets are required to be reported at the cost price of such assets to the taxpayer. However, where wealth-tax return was filed by the taxpayer and the asset was forming part of the wealth-tax return, such asset is required to be reported in Schedule AL of the ITR at the value such asset was reported in the latest wealth-tax return (in which the asset was disclosed) as increased by the cost of improvement incurred after such date.

Also, where asset became property of the taxpayer under a gift or will, the cost of such asset to be reported will be the cost for which the previous owner of the asset acquired it, as increased by the cost of improvement incurred by the previous owner or the taxpayer.

Reporting of foreign asset (Schedule FA)

Taxpayers who qualify as Resident and Ordinarily Resident (ROR) are taxable on their worldwide income in India. It is mandatory for the taxpayers qualifying as ROR to disclose assets held by them outside India anytime during the year in the ITR.

Foreign assets to be disclosed in the ITR include foreign bank accounts, immovable property, financial interest in any entity, other capital assets, etc. Taxpayers are also required to disclose the income from such assets along with its nature and the head of income under which the income has been offered to tax.

Also, under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, for ROR taxpayers, huge penalties and other implications may be applicable for any under-reporting or non-reporting of foreign income or foreign assets. Thus, it is essential to report complete details of foreign income and foreign assets in the ITR to avoid such penal implications.

Hope the above information makes it easier to file your ITR this year.

(The author is senior tax professional, EY India. Views expressed are personal.)

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