Income tax department warns: ‘Declare foreign assets or pay ₹10 lakh penalty’

The Income-Tax (I-T) department has today (November 17) launched a new campaign warning taxpayers of ₹10 lakh penalty if they fail to disclose foreign held assets or income earned from abroad in their ITR, according to a PTI report.

The “compliance-cum-awareness campaign” aims to ensure that taxpayers report all information in their Income Tax Return (ITR) for assessment year (AY) 2024-25. Further, the penalty will be imposed under the Anti-Black Money Law, it added.

What Constitutes Foreign Asset?

According to the I-T department advisory, for Indian residents a foreign asset would include bank accounts, cash value insurance contract or annuity contract, financial interest in any entity or business, immovable property, custodial account, equity and debt interest, trusts in which a person is a trustee, beneficiary of settlor, accounts with singing authority, any capital asset etc., held abroad.

It added that all eligible taxpayers “must mandatorily” fill the foreign asset (FA) or foreign source income (FSI) schedule in their ITR even if their income is “below the taxable limit” or the asset abroad was “acquired from disclosed sources”, the report said.

“Failure to disclose foreign asset/income in the ITR can attract a penalty of ₹10 lakh under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015,” the advisory added.

Monetary Penalty To Be Imposed

As part of the awareness campaign, the I-T department's administrative body, the Central Board of Direct Taxes (CBDT), will send “informational” SMS and email to those resident taxpayers who have already filed their ITR for AY 2024-25.

The communication will be sent to such persons who have been “identified” through information received under bilateral and multi-lateral agreements “suggesting” that these individuals may hold foreign accounts or assets, or have received income from foreign jurisdictions, the report said.

“The purpose of the campaign is to remind and guide those who may not have fully completed schedule foreign assets in their submitted ITR (AY 2024-25), especially in cases involving high-value foreign assets,” as per a statement from the CBDT.

The last date to file a belated and revised ITR is December 31, 2024.

(With inputs from PTI)