The Indian government is making all efforts to ensure that all foreign income and assets of the residents are disclosed in the Income Tax return itself. Now, many taxpayers have disclosed their foreign income and assets. However, there is still a gap on the part of various taxpayers who have failed to disclose their foreign assets or income. If you are one of those then the Income Tax Department has issued a special advisory to make such disclosure by 31st December to avoid adverse consequences.
1. Source of Information for the Government of India
- To enhance tax transparency and compliance across the globe, the Common Reporting Standard (CRS) and Foreign Account Tax Compliance Act (FATCA) frameworks are designed to curb tax evasion.
- This platform ensures that information is shared among tax officials worldwide to increase transparency.
- CRS requires financial institutions to report information about financial accounts held by foreign residents to their respective tax jurisdictions. This information is then exchanged with other jurisdictions annually.
- Similarly, FATCA, enacted by the United States, mandates foreign financial institutions to report accounts held by U.S. taxpayers to the IRS.
Read Also: Government Notified New Foreign Exchange (Compounding Proceedings) Rules, 2024
2. Nature of Information received by the Indian Government
Under CRS and FATCA, the Government of India received the following detailed information about the accounts held by its residents in foreign countries:
- Account holder's name, address, and tax identification number (TIN)
- Account number and balance
- Detail of Income such as interest, dividends, and other financial proceeds.
Through this information, the government can identify the Indian residents and whether such person has made corresponding disclosure in his ITR or not.
3. Disclosure of Foreign Asset and Foreign Income in Income Tax Return
The taxpayer is required to disclose Foreign Asset and Foreign Income in Income Tax return under the following clauses:
a. Schedule FSI: Details of income earned outside India and Tax Relief
- Details of income earned outside India and corresponding tax deducted are furnished in Schedule FSI of Income Tax Return.
- The taxpayer is required to furnish information under the following heads:
- Head of Income, i.e., Salary, Income from House Property, Capital gain, etc.
- Income from outside India included in Total Income;
- Tax Paid outside India
- Tax payable on such income under normal provisions in India
- Tax Relief available in India (lower tax paid outside India and tax payable on such income in India);
- The relevant article of DTAA if relief is claimed under section 90 or 90A of the Income Tax Act
b. Schedule TR: Summary of tax relief claimed for taxes paid outside India (available only in case of resident)
- Taxpayers are required to furnish country-wise details of taxes paid outside India. This clause applies only to the residents.
- The following information is required to be furnished in the Income Tax Return:
- Country code
- Taxpayer Identification Number
- Total taxes paid outside India
- Total tax relief available
- Tax Relief Claimed under section
- Total Tax relief available in respect of country where DTAA is applicable (section 90/90A)
- Total Tax relief available in respect of country where DTAA is not applicable (section 91)
c. Schedule FA: Details of Foreign Assets and Income from any source outside India
- The taxpayer is required to furnish details of foreign assets held outside India (including any beneficial Interest) at any time during the calendar year ending as of 31st December under the following clauses:
- Foreign Depository Accounts and custodial Accounts;
- Foreign Equity and Debt Interest held in any entity;
- Foreign Cash Value Insurance Contract or Annuity Contract;
- Financial Interest in any Entity held;
- Immovable Property;
- Any other Capital Asset held;
- Account(s) in which the taxpayer has signing authority and which has not been included in the above disclosures;
- Details of trusts, created under the laws of a country outside India, in which the taxpayer is a trustee, beneficiary, or settlor
- Details of any other income derived from any source outside India which is not included in,
- Above mentioned clauses; and
- income under the head business or profession
- Details of foreign assets held as of 31st December are to be furnished every year if such asset is held as of 31st December.
4. Consequences of Non-disclosure of Foreign Assets of Income
- If the taxpayer fails to furnish the information of foreign assets or Income in Income Tax return and as per information obtained by the Indian government, the taxpayer has such income or assets then the taxpayer may have to face stringent penalties and imprisonment in some cases as well.
- The Taxpayer can be prosecuted under Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.
5. Disclosure of foreign assets and foreign Income in Revised Income Tax Return or belated Income Tax return
- 纳税人应在所得税申报截止日期（2023-24财年为2024年7月31日或2024年10月31日）前，如实申报境外资产或境外收入。
- 若纳税人未能在所得税申报表（ITR）中进行此类披露，则可以选择提交修订后的所得税申报表。
- 纳税人可在修订后的ITR中进行必要的披露。
- 2023-24财年的修订申报表须在2024年12月31日前提交。
- 通过提交修订后的申报表，纳税人可以：
- 确保完整、准确地披露所有境外资产和收入；
- 避免因未披露而产生的罚款及法律后果；
- 根据印度税法及双重征税协定（DTAA）的规定，享受相应的税收减免。
- 若纳税人未能在截止日期前提交ITR，则可在2024年12月31日前提交逾期申报表。
6. ITR-U（更新申报表）并非万能方案
- 如果逾期或修订所得税申报表的截止日期已过，该怎么办？
- 纳税人可以选择提交ITR-U表格形式的更新所得税申报表。
- 然而，ITR-U并不总是纠正境外资产或收入披露问题的有效方案。
- ITR-U仅适用于更正少报或未报的收入，不能用于进行任何新的披露或更正。新的披露或更正只能在修订或逾期的ITR中进行。
- ITR-U（更新申报表）主要用于更正少报或未报的收入。它不能用于更正非收入相关的披露事项，例如未在FA附表中申报境外资产的情况。
7. 根据《黑钱法案》进行披露
- 如果纳税人未能在原始ITR、修订ITR或更新ITR中披露境外资产或收入，仍可选择根据《黑钱法案》进行披露。
- 《黑钱法案》为纳税人提供了自愿披露未申报境外资产和收入的机会，从而降低罚款及被起诉的风险。
- 但此选项仅适用于纳税人在税务部门通过执法行动或FATCA和CRS等国际数据共享机制发现违规行为之前，主动进行自愿申报的情况。
结论
披露境外资产或境外收入对于避免罚款和起诉至关重要。目前，印度政府正全面获取有关境外收入和资产的信息，纳税人必须采取纠正措施，确保完成必要的披露。
