The Income Tax Department (I-T dept) cautioned taxpayers on November 17, 2024, that failing to disclose foreign assets or income earned abroad in their Income Tax Return (ITR) could result in a penalty of Rs 10 lakh under the anti-black money law.
As part of a recently launched compliance and awareness campaign, the department issued a public advisory on Saturday, November 16, 2024, urging taxpayers to report foreign assets and income in their Income Tax Return (ITR) for the assessment year (AY) 2024-25.
The advisory clarified that, for a tax resident of India in the previous year, foreign assets include bank accounts, cash value insurance or annuity contracts, financial interests in any entity or business, immovable property, custodial accounts, equity and debt holdings, trusts where the person is a trustee, beneficiary, or settlor, accounts with signing authority, capital assets, and other assets held abroad.
The department stated that taxpayers falling under this criteria "must compulsorily" complete the foreign asset (FA) or foreign source income (FSI) schedule in their ITR, even if their income is "below the taxable threshold" or the foreign asset was "acquired from disclosed sources."
The advisory stated: “Failure to disclose foreign asset/income in the ITR can attract a penalty of Rs 10 lakh under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.”
The Central Board of Direct Taxes (CBDT), the governing body of the tax department, announced that as part of the campaign, it will send "informational" SMS and emails to resident taxpayers who have already filed their ITR for AY 2024-25.
The communication will be sent to individuals who have been "identified" based on information obtained through bilateral and multilateral agreements, indicating that they may hold foreign accounts or assets, or have received income from overseas jurisdictions.
The CBDT stated that the aim of the campaign is to remind and assist taxpayers who may not have fully completed the foreign assets schedule in their submitted ITR (AY 2024-25), particularly in cases involving high-value foreign assets. The deadline to file a belated or revised ITR is December 31.
Hence, to avoid penalties and ensure you comply with tax regulations, it’s crucial to review your foreign holdings and disclose them in your ITR for the assessment year 2024-25 before the deadline. “The income tax department’s push for declaring foreign assets is part of a broader effort to tackle black money and ensure fair tax compliance. For taxpayers, this means paying closer attention to what you report in your ITR and ensuring all foreign holdings and income are disclosed. Non-compliance could be costly, but proactive reporting will help avoid legal complications and penalties,” says Suneel Dasari, founder and CEO of EZTax.
