The Income Tax Department has issued a strict warning to taxpayers. The strict warning is regarding failing to declare foreign assets can lead to a hefty penalty of ₹10 lakh. As the ITR deadline is near, taxpayers with overseas investments or accounts must comply with the disclosure rules under the Black Money (Undisclosed Foreign Income and Assets) Act, 2015. Let’s dive deeper into what this means for you and why timely ITR filing is crucial.
What Are Foreign Assets and Why Do We Need to Declare Them in ITR Filing?
Foreign assets include property, bank accounts, financial interests, and other investments held outside of India.
To maintain transparency and prevent tax evasion, the Income Tax Department requires residents to disclose such holdings in their Income Tax Return (ITR).
Failure to declare foreign assets in an income tax return filing is considered a serious violation, with implications ranging from financial penalties to legal proceedings.
What will be the penalty if you don’t declare foreign assets in ITR Filing?
If you fail to declare your foreign assets in ITR Filing, you could face:
- A fine of ₹10 lakh for non-disclosure.
- Prosecution under the Black Money Act, which may include imprisonment.
- Additional penalties on tax dues, further increase your financial liability.
Furthermore, errors in disclosure can attract penalties. Therefore, it’s vital to carefully file your income tax return or get it filed by the professional.
What is the due date to declare foreign assets in ITR Filing?
The ITR filing deadline for declaring foreign assets for the tax year 2024-25 is December 31, 2024. Missing this deadline may result in penalties and scrutiny from the authorities.
How to Declare Foreign Assets in Income Tax Return Filing?
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Understand Your Residential Status
Determine whether you qualify as a resident for tax purposes, as only residents are required to disclose foreign assets.
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Compile data related to Assets & Liabilities situated outside India
Gather information on your international investments, such as account statements, property ownership documentation, and financial interests.
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Fill Schedule FA in ITR
Fill in the Schedule FA part of your income tax return to appropriately declare foreign assets.
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File Income Tax Return Online
Submit your return through the official Income Tax e-filing system or speak with a tax professional to ensure accuracy.
Why is the Income Tax Department becoming strict and cracking down?
The Income Tax Department is stepping up efforts to combat tax evasion and money laundering, utilising the Black Money Act to uncover undeclared foreign income. This measure aligns with worldwide standards such as FATCA and CRS, ensures transparency. Noncompliance exposes organizations to penalties, reputational damage, and tax scrutiny, making early notification critical.
Step-by-Step Guide to File Income Tax Returns Online & Offline
Moreover, if you need any other guidance on ITR Filing, ITR Refund, please feel free to talk to our business advisors at 8881-069-069.
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