Income Tax Department Warns Of Rs 10 Lakh Penalty For Non-Disclosure Of Foreign Assets In ITR

The Income Tax Department on Sunday issued a warning to taxpayers, emphasising that failing to disclose foreign assets or income earned abroad in their Income Tax Returns (ITR) could result in a penalty of Rs 10 lakh under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.

Compliance and Awareness Campaign

This announcement was part of a compliance and awareness campaign launched on Saturday, aimed at ensuring taxpayers report such information in their ITR for the assessment year (AY) 2024-25.

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Definition of Foreign Asset

The advisory clarified that for Indian tax residents in the previous year, foreign assets include bank accounts, cash value insurance or annuity contracts, financial interests in any business or entity, immovable property, custodial accounts, equity and debt interests, trusts (as trustees, beneficiaries, or settlors), accounts with signing authority, and other capital assets held abroad.

Mandatory Reporting

Taxpayers meeting these criteria "must mandatorily" complete the foreign asset (FA) or foreign source income (FSI) schedule in their ITR, even if their income is "below the taxable limit" or the overseas asset was "acquired from disclosed sources."

Penalty for Non-Compliance

The advisory warned, "Failure to disclose foreign asset/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."

Communication Efforts by CBDT

The Central Board of Direct Taxes (CBDT), which oversees the tax department, stated that as part of the campaign, it would send "informational" SMS and emails to resident taxpayers who have already filed their ITR for AY 2024-25.

Identification via Agreements

This communication will target individuals identified through data from bilateral and multilateral agreements, suggesting they may hold foreign accounts, own overseas assets, or have received income from foreign sources.

Campaign Objectives

The campaign aims to remind and guide taxpayers, particularly those with high-value foreign assets, who may have missed completing the relevant schedules in their ITR submissions for AY 2024-25.

Late ITR Filing Deadline

The deadline for filing late or revised ITRs is December 31.