A spike in income can change your ITR requirements. For instance, if your earnings cross Rs 1 crore, your CA may need to report your assets and liabilities under Schedule AL (Assets and Liabilities) while filing your ITR. Today’s Ask Wallet Wise query addresses what happens when your income exceeds Rs 1 crore.
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I am a salaried individual, and my taxable income has never crossed Rs40 lakh in the past. However, due to the sale of some of my old investments, my total income for FY 2025–26 has crossed Rs 1 crore. This year, my CA is asking me to provide a copy of my balance sheet, which he has never asked for before. I have never prepared a balance sheet in the past. Why is my CA asking for it now?
Until last year, taxpayers whose total income exceeded Rs 50 lakh were required to furnish details of their movable and immovable assets, as well as any liabilities against such assets. From this year, the threshold has been increased to Rs 1 crore.
Your CA is asking for a balance sheet to compile the details of all assets you own and liabilities you owe. While you are not required to submit a formal balance sheet unless you are engaged in business or profession, you do have to provide asset and liability details since your taxable income has now crossed Rs 1 crore.
Because you have taxable income under the head Capital Gains, you cannot use ITR‑1 and must file ITR‑2. Additionally, as your taxable income exceeds Rs 1 crore, you are required to fill out Schedule AL (Assets and Liabilities), furnishing details of your assets and liabilities as of 31st March 2025. Any assets sold during the year are not included in this schedule.
For immovable properties (land and buildings), you must provide the description, cost, and full address with PIN code. This disclosure includes: assets you purchased, assets inherited or received as gifts, properties where you are a joint owner.
For movable assets, you must report: Financial assets like cash, bank balances, shares, securities, and loans/advances, jewellery, bullion (including raw form), vehicles, yachts, boats, aircraft, and works of art.
Insurance policies are also considered assets. While term insurance plans do not generate returns, since the ITR schedule does not distinguish between term and traditional policies, it is advisable to include the total premiums paid on such plans as well.
All vehicles, including antique or unused vehicles, must be disclosed if they are still owned by you. If any loans are taken for these assets or secured against them, such liabilities must also be reported. The value to be furnished is the cost of acquisition, not the current market value.
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