Failure to disclose foreign assets or income could lead to Rs 10 lakh penalty, warns Income Tax department 

The Income Tax Department has issued a warning to taxpayers, stating that failure to disclose foreign assets or income in the Income Tax Return (ITR) may result in a penalty of up to Rs 10 lakh under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. 

The department issued this advisory as part of a new compliance and awareness campaign, launched on November 16, to ensure that taxpayers report their foreign assets and income when filing their ITR for the assessment year (AY) 2024-25. 

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The advisory clarified that for Indian tax residents, foreign assets include bank accounts, insurance contracts, annuity contracts, equity and debt interests, immovable property, custodial accounts, financial interests in entities or businesses, trusts where the individual is a trustee or beneficiary, and any other capital assets held abroad. 

Taxpayers falling under this category are required to fill out the foreign asset (FA) or foreign source income (FSI) schedule in their ITR, even if their income is below the taxable threshold or if the foreign assets were acquired through disclosed sources. 

The department highlighted that failure to disclose foreign assets or income could result in a penalty of Rs 10 lakh. It also noted that as part of its campaign, the Central Board of Direct Taxes (CBDT) will send informational SMS and emails to taxpayers, who have already filed their ITR for AY 2024-25. These communications will target those identified through information from bilateral and multilateral agreements, indicating that they may have foreign accounts, assets, or income. 

The goal of the campaign is to assist taxpayers in accurately completing the foreign asset schedule in their ITR, especially for those with high-value foreign assets.  

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