New Delhi – The Income Tax Department has issued a stern warning to tax payers regarding the essential disclosure of foreign assets and income in their Income Tax Returns (ITR). In a public advisory released on Sunday, the department emphasized that failure to declare these assets can lead to a substantial penalty of Rs 10 lakh under the anti-black money law. As part of a compliance and awareness campaign aimed at promoting transparency, the advisory was launched to ensure taxpayers accurately report their foreign holdings in the ITR for the assessment year (AY) 2024-25.
The deadline for filing belated and revised ITRs is December 31, making it imperative for taxpayers to act quickly. The advisory clarified what constitutes a foreign asset for Indian tax residents. This includes a wide array of holdings such as overseas bank accounts, cash value insurance contracts, annuities, financial interests in foreign entities or businesses, immovable properties, custodial accounts, and various capital assets held abroad. Tax payers are reminded that disclosing foreign assets and income is mandatory, regardless of whether their income falls below the taxable limit or if the assets were acquired from disclosed sources.
"Failure to disclose foreign assets or 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 advisory clearly stated. To facilitate compliance, the Central Board of Direct Taxes (CBDT), which oversees the tax department, will be sending informative SMS and emails to tax payers who have already submitted their ITR for AY 2024-25. This communication will target individuals identified through information obtained from bilateral and multi-lateral agreements, indicating potential foreign accounts or assets.
The CBDT aims to remind and assist tax payers who may not have fully completed the foreign asset schedules in their submitted ITR, particularly in instances involving high-value foreign assets. Tax payers are urged to review their disclosures carefully and ensure compliance before the approaching deadline. With significant penalties at stake, this advisory serves as a crucial reminder for all taxpayers to act diligently in their financial reporting.
