Taxpayers with Undisclosed Foreign Assets Must Revise ITRs by 31st Dec 2024

It is understood that 2 lakh ITRs have been filed so far during the current assessment year giving details of foreign assets and income. All Indian residents are required to declare their foreign assets. This can include real estate, bank accounts, shares, debentures, insurance policies or any other financial assets. A resident Indian is also required to inform the Income Tax Department about the shares received from their employers and income earned through employee stock options by filling the foreign assets and foreign source income schedule.

The CBDT has vide Press Release dated 16th Nov 2024 has launched a Compliance-Cum-Awareness Campaign for Assessment Year (AY) 2024-25 to inform taxpayers to accurately complete their Schedule Foreign Assets and reporting income from foreign sources in their ITRs. Compliance with Schedule FA and FSI is mandatory under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, which requires the full disclosure of foreign assets and income.

These messages will be sent to individuals identified through information received under bilateral and multilateral agreements, suggesting that they may hold foreign accounts or assets, or have received income from foreign jurisdictions.

Those who have such assets or income but have filed ITR-1 or ITR-4 will have to file revised or belated returns by December 31, 2024, to avoid penalties and prosecution as prescribed under the anti-black money law. The taxpayer should use ITR-2 or ITR-3 as per his tax profile to correctly reflect the Schedule Foreign Assets (Schedule FA). Incase taxpayers do not disclose the income earned from their foreign assets or their foreign assets in the ITR, they may be fined up to Rs 10 lakh.

The Common Reporting Standards (CRS) by OECD and the Foreign Account Tax Compliance Act (FATCA) by USA are other such international initiatives to keep tax evasion under check. Under CRS and FATCA, India receives detailed information about financial accounts held by its residents in foreign jurisdictions. This includes:

• Account holder's name, address and tax identification number (TIN)
• Account number and balance
• Income details such as interest, dividends and other financial proceeds.

This information helps the Income Tax Department to know global income of its resident taxpayers and to identify taxpayers who may not have disclosed their foreign assets and income.

For further guidelines, click here