Declaring Foreign Assets in Tax Returns: A Guide for Indian Taxpayers

Who Must Disclose Foreign Assets?
Indian taxpayers who are Resident and Ordinarily Resident (ROR) are legally obligated to disclose all foreign assets and income when filing their Income Tax Return (ITR). Failure to comply can result in hefty penalties and legal consequences under the Black Money Act, 2015.

Key Reporting Requirements

Taxpayers must declare:

1. Foreign Assets:

   • Overseas bank accounts, equity and debt investments, and depository/custodian accounts
   • Immovable property outside India
   • Jewels, metals, cash, or equivalents
   • Loans or advances given
   • Unquoted shares in private foreign companies
   • Business investments abroad

2. Foreign Source Income:

   • Salary, dividends, interest, rental income, and capital gains from foreign sources

Schedules to Fill in ITR

• Schedule FA: Report foreign assets.
• Schedule FSI: Disclose income earned from foreign sources.
• Schedule TR: Claim relief for taxes paid abroad under Double Tax Avoidance Agreement (DTAA).
  • Form 67 and a Tax Residency Certificate (TRC) are mandatory for claiming foreign tax credits.

Penalties for Non-Disclosure

Under the Black Money Act, 2015, failing to disclose foreign income or assets can result in:

• Penalty: ?10 lakh
• Imprisonment: Up to 7 years

Key Advisory

• Accurately disclose offshore accounts and income.
• Retain supporting documents for transparency.
• Ensure timely compliance to avoid legal scrutiny and penalties.

Conclusion
The Central Board of Direct Taxes (CBDT) emphasizes accurate reporting of foreign assets in the ITR. Proper disclosures safeguard taxpayers from penalties and ensure compliance with Indian tax laws.

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