Inherited Jewellery & Ancestral Property: Report It Right, Not Bright!

 

[Query 1]

My taxable income exceeded 1 crore this FY 24-25. Hence, I am required to fill in “Asset & Liability” information in the Income tax Return portal. I have two queries relating to this:

1.  I have inherited certain jewellery from my parents who purchased it from 1957 till 1983 at about total ₹30,000/- @ ranging from ₹ 110 to ₹ 1,700/- per tola as per (most of) the available bills. What amount is to be filled in the “amount” column? Purchase price or the current market value?  Moreover, do I need to mention each and every item therein with their individual weight or to just mention gross weight?

2.  While I was 9 years old, my mother, jointly with me & my younger brother purchased a house in 1967 for ₹16,000/- and spent about ₹ 2 lakhs in 1982-83 in extension. Its value is about ₹ 11 Lakhs as on 1.4.2001. Upon the death of my mother, I hold half a share in it. Which amount is to be shown in the “amount” column of AL format for my 50% share? Purchase price or value on 1.4.2001 or current indexed value? My investment therein is Nil. Please guide so that others also can get enlightened. [Vinod M – vinodm58@gmail.com]

Opinion:

Thank you, Mr. Vinod ji for your insightful queries regarding the Asset & Liability (AL) Schedule in the Income Tax Return (ITR). Your questions are common for high-income taxpayers and I am happy to cover them here. With income over ₹ 50 lakh (or ₹1 crore in your case), the Income Tax Department doesn’t just want your taxes. They want a sneak peek into your treasure chest too. The AL Schedule in ITR is not for tax computation but for disclosure. CBDT requires those with income over ₹50 lakh to disclose movable and immovable assets-and any liabilities linked to them in Schedule AL. If anyone is a non-resident or resident but not ordinarily resident, only the details of assets located in India are to be mentioned. Coming to the specific issue in the query above, the following may be noted:

1.  Valuation Basis for Jewellery:

So, your parents bought gold when it was cheaper than popcorn at a street stall-talk about solid investment sense! And now it shines in your locker-but how should it shine in your ITR? The AL schedule aims for a historical record of asset acquisition values rather than fluctuating market values. The jewellery should be reported at cost price, i.e., what was actually paid to acquire it – even if it is inherited. In your case, since you have bills for most of the jewellery, the total of ₹30,000 spent between 1957 and 1983 is what should be mentioned in the “Amount” column of the AL Schedule.

Now, if some bills are missing or values are unclear, you’re allowed to estimate the Fair Market Value (FMV) as on 1st April 2001. But that’s just a backup route-used more often in capital gains cases, not routine AL Schedule disclosures.

What Not To Do while filing Schedule AL in ITR:

·  Do notuse today’s gold rate.

·  Do notGoogle “price of gold in 2025” and multiply by weight.

·  Do notinflate it thinking it will impress the taxman. It won’t.

Format of Reporting for Jewellery- How Much Details:
It’s an ITR, not a Karan Johar production-no need for a slow-motion walkthrough of each bangle and brooch. Just give a crisp summary, not a star-studded ornament inventory. You may
a) Use a simple description like: “Gold Jewellery – Inherited from Parents”
b) Mention the aggregate cost (₹ 30,000 in your case).
c) If you wish, you may add: “Gross weight – XXX grams” as a line in the description box.
d) Item-wise details, weight of each bangle or stone setting information is not required.
e) Do not use current market value for disclosure in AL schedule unless specifically required (which it isn’t, in this case). Keep it simple, keep it truthful, and remember: the AL Schedule is a form, not a fashion parade

2.  Reporting jointly held inherited house property – how to value your 50% share?
Now for your second question. You acquired the 50% share in your mother’s house after her death. The property was originally bought in 1967 for ₹16,000 and later extended with ₹ 2 lakh in 1982-83. FMV as of 1.4.2001 is around ₹ 11 lakh. Now you want to know how to value your 50% share. In case of jointly held property acquired by inheritance/gift:

a)Basis of Valuation:
Again, cost of acquisition is to be reported. Since your share is inherited, if the cost is determinable, use the proportionate original cost of ₹08 Lakh (i.e., 50% of ₹16,000 + relevant share of extension cost of ₹2 Lakh). Since the cost in your case is very well determinable, the FMV as on 01.04.2001 would not at all be relevant. It would have been relevant only if the original cost was not known. You are not required to use current market price or indexed cost. The AL Schedule isn’t meant to compute capital gain but simply to record cost-based disclosure of capital assets.

b)Reporting Style in ITR:
Mention: “50% share in inherited residential house property”
Value: ₹08 Lakh. Even though your direct investment in the property is nil as an inherited asset, its value for AL disclosure purposes is based on the cost of acquisition by the original owner (or its FMV as on April 1, 2001 if the cost is not available).

Key Takeaways for High-Income Taxpayers:

1.  AL Schedule = Original cost or FMV on 1.4.2001:
Never use current market value or indexed cost unless you’re calculating capital gains.

2.  Keep It Clean, Not Complicated
The tax department wants disclosures, not drama.

3.  Inherited Assets Deserve Respect, Not Resale Value:
When reporting such assets, stick to facts-not fantasies.

  

Closing the Jewellery Box – And the ITR:

The Asset & Liability Schedule is a compliance formality requiring honest disclosure of your assets based on their original cost of acquisition. Reporting your wealth honestly in Schedule AL doesn’t lead to additional tax in itself. It’s about transparency and compliance. Consider it as a handshake with the taxman-firm, sincere and without sweaty palms. So, breathe easy, Vinod ji and to all readers in similar shoes. The IT Department isn’t interested in sentimental value – only historical cost.

[Views expressed are the personal view of the author. Readers are advised to seek professional advice before taking any decisions. Readers may forward their feedback & queries at nareshjakhotia@gmail.com.  Other articles & response to queries are available at www.theTAXtalk.com]