Deadline to Revise ITR for Foreign Income: Avoid ₹10 Lakh Penalty

November 18, 2024 By: Shalini Bhardwaj

Taxpayers who failed to disclose foreign income or assets in their original Income Tax Returns (ITR) for the assessment year 2024-25 can still make corrections by filing a revised return. The last date to submit the revised ITR is December 31, 2024. Failing to do so could result in a penalty of up to ₹10 lakh under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.

The Income Tax Department issued an advisory on November 18, urging taxpayers to ensure compliance with disclosure requirements. The department highlighted that revising the ITR provides an opportunity to rectify any omissions related to foreign assets or income earned abroad.

E-Campaign to Ensure Transparency

To create awareness, the Income Tax Department is running an e-campaign targeting taxpayers who might have missed reporting foreign income or assets. This campaign is part of initiatives under the Common Reporting Standard (CRS) and the Foreign Account Tax Compliance Act (FATCA), which aim to increase transparency and combat tax evasion globally.

Under these frameworks, foreign financial institutions share information with Indian authorities about accounts held by Indian residents. This data helps the government identify taxpayers who might have undisclosed foreign income or assets.

What Taxpayers Need to Do

If you have foreign income or assets, it is mandatory to fill specific schedules in your ITR:

1. Schedule FA (Foreign Assets): Includes details of foreign bank accounts, properties, financial interests in businesses, trusts, or any asset with signing authority.
2. Schedule FSI (Foreign Source Income): Captures income earned from foreign sources, even if the income is below the taxable threshold.

The Income Tax Department clarified that even if your income from foreign sources is not taxable, or if the assets were acquired from disclosed sources, these schedules must be filled correctly.

Why File a Revised Return?

Filing a revised return allows taxpayers to avoid penalties and legal complications. Here’s why it’s essential:

• Penalty Avoidance: A fine of up to ₹10 lakh can be imposed for non-disclosure.
• Stay Compliant: Ensure adherence to tax laws and maintain transparency.
• Correct Mistakes: Use this chance to fix omissions or errors in the original return.

How the Government Identifies Non-Disclosure

The Income Tax Department leverages information from bilateral and multilateral agreements with other countries. Data from foreign institutions about Indian residents’ financial accounts, properties, and income helps identify discrepancies. Taxpayers identified through these channels receive informational messages via SMS or email, urging them to correct their ITR filings.

Key Deadline

The last date to file a revised ITR for the assessment year 2024-25 is December 31, 2024. Taxpayers should not delay, as the penalty for failing to disclose foreign assets can be significant.

Act now to ensure compliance and avoid unnecessary penalties under India’s stringent anti-black money regulations.