New Delhi: In a stern advisory issued on Sunday, the Income Tax Department reminded taxpayers of their obligation to disclose foreign assets and income earned abroad in their Income Tax Returns (ITR). Failure to comply can lead to penalties of up to ₹10 lakh under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.
Comprehensive Compliance Campaign Launched
The advisory is part of a compliance-cum-awareness campaign initiated by the tax department on Saturday, targeting taxpayers for the assessment year (AY) 2024-25. The campaign aims to enhance awareness about mandatory reporting requirements and ensure full compliance.
What Qualifies as a Foreign Asset?
The department clarified that for Indian tax residents, foreign assets include a wide range of holdings abroad, such as:
- Bank accounts
- Financial interests in entities or businesses
- Immovable property
- Custodial accounts
- Equity and debt investments
- Trusts, where the individual is a trustee, beneficiary, or settlor
- Cash value insurance contracts or annuities
- Capital assets or accounts with signing authority
Even assets acquired from disclosed sources must be reported, regardless of taxable income.
Mandatory Disclosure in ITR
Taxpayers meeting these criteria are required to complete the Foreign Asset (FA) or Foreign Source Income (FSI) schedule in their ITR. This is mandatory even if their income falls below the taxable limit.
Penalty for Non-Compliance
Non-disclosure of foreign income or assets in the ITR can result in a hefty ₹10 lakh penalty, underscoring the government’s strict stance on black money and undisclosed wealth abroad.
Proactive Outreach by CBDT
As part of the campaign, the Central Board of Direct Taxes (CBDT) is sending informational SMS and emails to resident taxpayers who have already filed their ITR for AY 2024-25. The notices will target individuals identified through bilateral and multilateral agreements that provide information on foreign accounts, assets, or income from foreign jurisdictions.
The outreach aims to guide taxpayers who may have inadvertently failed to report foreign assets, especially those involving high-value holdings.
Final Reminder: December 31 Deadline
Taxpayers have until December 31, 2024, to file belated or revised ITRs. The department’s advisory serves as a crucial reminder to ensure all foreign income and assets are accurately disclosed to avoid penalties.
Global Cooperation in Action
The announcement coincides with broader efforts to tackle financial irregularities, including recent news of the U.S. returning $10 million worth of stolen antiques to India. These developments highlight the growing global collaboration to combat financial crimes and preserve accountability.
Taxpayers are advised to act promptly and seek professional guidance to avoid penalties and ensure compliance with the law.
