Indian law mandates resident individuals who hold specified foreign assets (FAs) during the relevant accounting period to file an income tax return (ITR). They must disclose all their foreign assets and incomes therein. Failure to do so can lead to a heavy penalty or even imprisonment.
"The Income-Tax (I-T) Department can issue a notice for up to 17 years if you underreport or fail to report your foreign assets or income," says Ankit Jain, partner, Ved Jain & Associates.
Who must report?
Individuals and Hindu Undivided Families (HUFS) classified as resident and ordinarily resident (RoRs) must report their foreign incomes, assets, and accounts in Schedule FA of ITR forms, regardless of whether the income is taxable in India or not.
"Section 139(1) mandates the filing of ITRS for residents holding overseas assets as beneficial owners or as signing authorities on accounts located abroad. It also applies to those who are beneficiaries of assets located outside India," says Pallav Pradyumn Narang, partner, CNK. Non-resident Indians (NRIs) or taxpayers who are not ordinarily residents (RNOR) are exempt from reporting their overseas assets in the ITR.
Which assets must be disclosed?
In the ITR form, details of foreign assets and income must be provided for bank accounts (depository and custodial accounts), equity, and debt instruments. "Insurance and annuity contracts, financial interest in any foreign entity, immovable properties and other capital assets, assets and income held in trust, signing authority for any account, and any other income derived from such foreign assets must be disclosed," says Rony Oommen John, advocate on record at the Supreme Court.
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Denne historien er fra June 17, 2024-utgaven av Business Standard.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
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India on top of luxury firms' 'watch' list
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BURNING ISSUE
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97% rail electrification done
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India set to join FTSE Russell bond index next year
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