Income Tax Department Warns of Rs 10 Lakh Penalty for Failing to Disclose Foreign Assets and Income
The Income Tax Department has issued a stern reminder to taxpayers about the mandatory disclosure of foreign assets and income in their Income Tax Returns (ITR) for the assessment year (AY) 2024-25. Failure to report such information can 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.
In an advisory issued on Sunday, the department outlined that Indian tax residents are required to disclose any foreign assets held, including bank accounts, insurance contracts, annuity contracts, immovable property, business interests, trusts, and other capital assets located abroad. This disclosure must be made in the relevant schedule for foreign assets or foreign source income (FSI) in the ITR, regardless of whether the taxpayer’s income falls below the taxable limit or the foreign asset was acquired using disclosed sources.
As part of its ongoing compliance campaign, the Central Board of Direct Taxes (CBDT) has initiated an awareness drive to ensure taxpayers adhere to these requirements. The department will send informational SMS and emails to taxpayers, particularly those who may be identified through bilateral and multilateral agreements suggesting they hold foreign assets or have foreign income. These communications will focus on reminding and guiding individuals to complete their foreign asset disclosures properly, especially in cases involving high-value foreign assets.
Taxpayers are urged to comply with the regulations before the deadline for filing belated or revised ITRs, which is December 31, 2024.
