Disclose foreign asset or income details in ITR by December 31, 2024 or else Rs 10 lakh penalty can apply, says Income Tax Department
Ever since the Black Money law was enacted, taxpayers who fail to submit adequate disclosures about their foreign incomes, assets, and other information are heavily penalised. What was earlier only as a violation of income tax law, has now become both income tax and black money law violation. So, it will have double legal repercussions if one does not report foreign income and assets on time as required by both the laws.#sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;} "In my experience, I found many salaried classes taxpayers land in trouble unwittingly by not disclosing their foreign bank account opened during their on-site assignment abroad or shares received as ESOP during their employment with multinational companies. Non-disclosure of foreign accounts by resident taxpayers in the relevant schedule of ITR can trigger initiation of penalty by the tax Department. Release of this e-brochure by the Income Tax Department goes a long way in creating awareness among taxpayers of their mandatory disclosure obligations beyond returning correct income," says Ramakrishnan Srinivasan, former chief commissioner of Income Tax.
However, many taxpayers are still unsure about who and under what circumstances are required to mandatorily report their foreign assets or income. In order to bring more clarity on this issue, the income tax department on December 11, 2024, released a brochure which answers some questions about which taxpayers need to file schedule foreign assets (FA) and others in their ITR on or before December 31, 2024, if not done already.
What did the Income Tax Department say about disclosing foreign income and assets
The income tax department in the brochure laid out some frequently asked questions and their answers. Here they are:Who should disclose foreign assets/income?
Any resident in India, who is having foreign income or foreign assets.
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Who is Resident Indian?An Individual, who has stayed 182 days or more in India in any previous year, or an individual, who has stayed 365 days or more in India in four preceding years, and 60 days or more in previous year,A Hindu Undivided Family (HUF), Firm, or Association of persons (AOP) is resident in India, except where the control and management of its affairs is situated wholly outside India,
A company, which is an Indian company, or a company having its effective place of management in India.
What is included in foreign income and assets?
Foreign assets include Foreign Bank Account, Foreign Equity and Debt interest, financial interest in any entity/business, immovable property, and other capital asset, any beneficial interest in any of the foreign assets, etc.Foreign income includes foreign income in forms such as interest, dividend, gross proceeds, redemption, others, etc.
Where to disclose?
By choosing correct ITR form (other than ITR-1 and ITR-4), as applicable, as per your particulars.
ITR-1 and ITR-4 do not have Schedule FA, Schedule FSI, and Schedule TR.
When to disclose?
By declaring in Income Tax Return, applicable, for the Assessment Year, in which taxpayer is resident in India in previous year.
By filing an applicable return of income before the due date as per section 139(9) of Income Tax Act, 1961.
Where to disclose foreign assets and income in ITR?
Schedule FA is for furnishing details of foreign assets and income from any source outside India.Schedule FSI is for furnishing details of Income from outside India and tax relief.Schedule TR is for providing details of summary of tax relief claimed for taxes paid outside India.How to disclose?Collate all relevant information about foreign assets (including type of asset, country, address, date of acquisition, income generated).
Collate details of all foreign income (including type of income, amount earned, country, tax paid on foreign income)
Fill the necessary details in the Schedules applicable, by referring to step by step guide available on income tax.gov.in
Claim tax benefit under Double Tax Avoidance Agreement, if applicable by filing form 67, in addition to Schedule TR.
What to do if an Income Tax Return is not filed before the due date?
If return not filed, belated return can be filed till 31st December 2024Foreign Assets and Income have to be declared even if income is below taxable limit.
What to do if Income Tax Return is already filed, but foreign assets and income are not declared?
Revise your return before the due date for revised return, i.e. 31st December 2024. Choose the correct ITR form while filing revised returns (if earlier ITR-1 or ITR-4 filled). Furnish details of foreign income and assets in Schedule FA, Schedule FSI and Schedule TR.What are the benefits of disclosing Foreign Assets and Income?
Compliance with disclosure requirements under Black Money (Undisclosed Foreign Income and Assets) and imposition of Tax Act, 2015. Avoidance of any double taxation, in relation to income earned outside, where taxes are already paid. Prevention from penalties relating to non-disclosure and inaccurate particulars under Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.What are the consequences of non-disclosure for foreign income and assets?
Assessment proceedings can be initiated under Black Money (undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.Penalty of Rs 10 lakh can be levied, if the aggregate value of an asset or assets (other than immovable property) exceed twenty lakh rupees:
Where person who has foreign assets and income fails to furnish the return of income, as per section 42 of Black Money Act, 2015Where taxpayer fails to furnish an information or furnish inaccurate particulars about an asset (including financial interest in any entity) located outside India in return of income, as per section 42 of the Black Money Act, 2015.Prosecution Proceedings can be initiated under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. #sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;}
This story originally appeared on: India Times - Author:Faqs of Insurances
