The Income Tax Department has cautioned taxpayers that not disclosing foreign assets or income in their Income Tax Return (ITR) could lead to a penalty of up to Rs 10 lakh under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.
Taxpayers Must Disclose Foreign Assets in ITR for AY 2024-25
As part of a new compliance and awareness initiative launched on November 16, the department issued this advisory to ensure that taxpayers disclose their foreign assets and income while filing their Income Tax Return (ITR) for the assessment year (AY) 2024-25.
Want to know your tax liability? Calculate it now. The advisory explained that for Indian tax residents, foreign assets encompass a range of holdings, including bank accounts, insurance contracts, annuity contracts, equity and debt interests, immovable property, custodial accounts, financial interests in entities or businesses, as well as trusts where the individual serves as a trustee or beneficiary. Additionally, any other capital assets held outside India are also considered foreign assets.
Taxpayers in this category must complete the foreign asset (FA) or foreign source income (FSI) schedule in their Income Tax Return (ITR), regardless of whether their income falls below the taxable threshold or if the foreign assets were acquired through disclosed sources.
Penalty for Non-Disclosure of Foreign Assets
The department emphasized that not disclosing foreign assets or income could lead to a penalty of Rs 10 lakh. It also mentioned that as part of its awareness campaign, the Central Board of Direct Taxes (CBDT) will send informational SMS and emails to taxpayers who have already filed their ITR for AY 2024-25. These communications will be directed at individuals identified through data from bilateral and multilateral agreements, suggesting they may have foreign accounts, assets, or income.
The campaign aims to help taxpayers correctly fill out the foreign asset schedule in their ITR, particularly those with high-value foreign assets. The deadline for filing a belated or revised ITR is December 31, 2024.
