The Income Tax Department has announced a new Compliance-Cum-Awareness Campaign for the Assessment Year (AY) 2024-25, emphasizing the importance of disclosing foreign assets and income in tax returns. This initiative targets taxpayers identified through information received under bilateral and multilateral agreements, indicating potential holdings of foreign accounts or income from foreign jurisdictions.
Mandatory Disclosure of Foreign Assets and Income
As part of this campaign, the Central Board of Direct Taxes (CBDT) has mandated that certain taxpayers must fill out the Foreign Asset (FA) and Foreign Source Income (FSI) schedules in their Income Tax Returns (ITR), even if their income falls below the taxable limit or if the asset was acquired from disclosed sources. Non-compliance can lead to significant penalties, with fines of up to ₹10 lakh for failure to disclose required foreign information.
The tax department is utilizing technology to facilitate adherence to these regulations and reduce direct human interaction. “By leveraging data obtained through the Automatic Exchange of Information (AEOI), the department aims to create a more efficient, taxpayer-friendly system,” stated an official from the CBDT.
Campaign Details
To assist taxpayers, the department will send informational messages via SMS and email to residents who have already submitted their ITRs for AY 2024-25. These messages will offer guidance for those who may not have fully completed the Schedule Foreign Assets in their returns, particularly in cases involving high-value foreign assets.
The department’s commitment to fostering a culture of transparency and accountability complements the government’s vision for a developed India. By raising awareness around compliance with the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, the CBDT encourages all eligible taxpayers to fulfill their obligations and contribute to the nation’s economic development.
Compliance Is Key
It is crucial for taxpayers to comply with the regulations set forth under the applicable laws. The Income Tax Act mandates residents to disclose foreign assets and income in their tax returns, with Schedule FA designated for reporting foreign assets and Schedule FSI for reporting income from foreign sources. Taxpayers also have the opportunity to claim tax relief on taxes paid abroad by filling out Schedule TR (Tax Relief).
Failure to disclose foreign assets and income can incur severe penalties and potential prosecution under the Black Money Act. Therefore, the tax department stresses that adherence to these regulations is critical to avoid legal repercussions.
In summary, the CBDT’s campaign aims to guide and support taxpayers in accurately reporting their foreign financial interests, enhancing compliance and fostering an environment of accountability and transparency within the tax system.
