The Income Tax Department has issued a strong warning to taxpayers regarding the disclosure of foreign income and assets. Residents of India who fail to declare such details in their Income Tax Returns (ITR) for the assessment year 2024-25 may face penalties of up to ₹10 lakh under the Black Money (Undisclosed Foreign Income and Assets) Act, 2015.
As the deadline for late and revised ITR filing approaches on December 31, taxpayers are urged to ensure all foreign holdings and earnings are reported accurately. Here’s everything you need to know to stay compliant.
What Counts as Foreign Assets or Income?
Foreign assets and income that need to be reported in your ITR include:
- Bank accounts held abroad.
- Real estate or property owned outside India.
- Insurance policies or annuity contracts overseas.
- Financial interests in businesses or entities abroad.
- Equity or loan investments overseas.
- Trusts where you are a trustee, settlor, or beneficiary.
- Custodial accounts or accounts with signature authority.
- Capital gains from selling assets abroad.
What Happens If You Don’t Disclose Foreign Income or Assets?
- ₹10 Lakh Penalty:
Non-disclosure of foreign assets or income can lead to a penalty of ₹10 lakh under the Black Money Act. - Legal Implications:
Failing to disclose foreign assets is considered a serious violation. The law aims to tackle black money and undisclosed wealth held abroad. - Mandatory Declaration:
Tax residents of India must fill out the Foreign Assets (FA) and Foreign Source Income (FSI) schedules in their ITR, regardless of whether the income falls below the taxable limit.
How the Income Tax Department Identifies Cases
To ensure compliance, the Central Board of Direct Taxes (CBDT) has initiated an awareness and compliance campaign:
- SMS and Email Alerts: Taxpayers who have filed their ITR for AY 2024-25 will receive reminders via SMS or email if flagged for non-disclosure.
- Global Data Sharing: India uses bilateral and multilateral agreements to gather information about residents’ foreign holdings.
Steps to Avoid Penalty
- Review Foreign Holdings:
Check all your foreign bank accounts, investments, and assets to ensure nothing is left undisclosed. - Use the Correct Schedules:
Complete the FA and FSI sections of your ITR accurately. Seek professional help if needed. - File by December 31:
The deadline for late and revised ITR submissions is December 31. Ensure you file on time to avoid further scrutiny.
Taxpayers are reminded that hiding foreign assets is a punishable offense under Indian law. With stricter monitoring and enhanced global cooperation, the Income Tax Department is leaving no room for non-compliance. Stay informed, disclose your income, and file your returns correctly to avoid penalties.
