Central Board of Direct Taxes (CBDT), the Indian authority responsible for administration of the direct tax laws, has recently released instructions to fill up the new forms of Income Tax Returns. However, experts are of the opinion that filling up the new schedule for declaration of assets and liabilities is not going to be easy.
Individuals and HUFs earning more than Rs 50 lakh in a year will be required to disclose their moveable and immovable assets and liabilities in a new AL section for AL.
The declaration would have to be done at cost, which means that they have to be declared at the price at which they were acquired by the taxpayer. This is what experts feel will be a huge challenge because of the dynamic nature of assets because of appreciation or depreciation in their values. Not only this, since the assets value keeps on changing, the declarations would not be able to 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," Archit Gupta, founder of ClearTax.in, told ET.
Another problem for the tax payers would be to ascertain the buying cost of assets that have been passed down from more than a generation ago.
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