Schedule AL, Explained Properly

Crossed fifty lakh in income? Your return has an extra section. Here is what it wants and the one mistake nearly everyone makes.

What it is

Schedule AL is a part of the income tax return where you list your assets and your liabilities. It applies if your total income for the year is above fifty lakh rupees.

It is a disclosure, not a charge. Nothing extra is taxed because of what you list. Wealth tax was abolished years ago.

The mistake

Schedule AL asks for cost, not market value.

What you paid. Not what it is worth today. This is the opposite of a capital gains valuation, and people get it the wrong way round constantly, including people who are otherwise very careful with their tax.

What you list

• Land and buildings, at cost
• Gold, jewellery and valuables, at cost
• Vehicles, boats and aircraft
• Bank balances and cash
• Shares, securities and insurance policies
• Loans and liabilities on the other side

Add yours up here

The hard part: assets with no known cost

If you inherited a house and nobody knows what your father paid for it in 1979, you still have to enter a figure.

The answer is to reconstruct a supportable cost from records that do exist. Sub registrar records and the notified rates of the time are the usual sources. You then note how the figure was arrived at, so it can be explained if anyone asks. That is a valuer's work. How we do it.

Consistency matters more than precision

Whatever basis you use, use it the same way every year and be able to explain it. A figure that jumps around without explanation invites questions. A reasoned figure that stays stable rarely does.