What will be the implication in case of NRI returned to india, for declaration of foreign assets in their indian income tax returns?
Mandatory Disclosure of Foreign Assets:
As per the Income Tax Act and the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, Indian residents must disclose foreign assets and income in their Income Tax Return filing for non resident indian using Schedule FA. This helps the government track foreign assets and prevent tax evasion and money laundering.
Double Taxation Avoidance Agreement (DTAA) for NRIs:
Residents can avoid paying taxes on the same income in multiple countries by claiming relief under Double Taxation Avoidance Agreement (DTAA) for NRIs, an agreement between countries to avoid double taxation.
When to Report:
Taxpayers must disclose foreign assets held at any time during the relevant calendar year (e.g., for AY 2023-24, disclose assets held from 1st Jan 2022 to 31st Dec 2022). Assets acquired between Jan-Mar 2023 do not need to be reported for AY 2023-24.
Steps for Reporting Foreign Assets:
Identify the category of foreign assets.
Provide details such as name, address, and balance of the asset.
Report income, revenue, or proceeds earned from the asset.
Include details of anyDTAA relief claimed for income from foreign assets.
Penalties for Non-Disclosure or Misrepresentation:
INR 10 lakh penalty per year for failing to disclose foreign assets.
Non-reporting may be considered willful tax evasion, leading to imprisonment of up to 7 years.
Non-declaration revokes the right to claim DTAA relief.
Exceptions:
No need to file Schedule FA if investing in Indian mutual funds with a foreign investment mandate.
If aggregate foreign bank account balances do not exceed INR 5 lakh, no penalty is imposed for non-declaration.
Enforcement and Penalty Cases:
India has a strong Exchange of Information (EOI) network with foreign countries, enabling the sharing of financial and investment data. The Financial Intelligence Analysis Unit (FIAU) handles data analysis and enforcement. In a recent case, a couple faced a penalty of INR 10 lakhs for failing to disclose foreign investments made via LRS across four years.
Our Blogs
Exciting News for NRI: No Capital Gains Tax in India on Mutual Fund Redemptions, Rules ITAT
Read MoreIncome Tax Return for NRIs: Who Needs to File and How?
Read MoreWhat is the law regarding declaration of foreign Assets by the NRI, who have returned to India?
Read MoreWhen does one become an "NRI" as per indian laws?
Read MoreWhat steps are to be taken if Income tax notice is recieved by the NRI?
Read MoreHow is alimony taxed in India ?
Read MoreDo I need to file return even if no income in India?
Read MoreWhat will be the implication in case of NRI returned to india, for declaration of foreign assets in their indian income tax returns?
Read MoreReceived a Income tax notice, here are reasons why many NRIs are getting notices from income tax department
Read MoreWhat will be the implication in case of NRI returned to india, for declaration of foreign assets in their indian income tax returns?
Mandatory Disclosure of Foreign Assets:
As per the Income Tax Act and the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, Indian residents must disclose foreign assets and income in their Income Tax Return filing for non resident indian using Schedule FA. This helps the government track foreign assets and prevent tax evasion and money laundering.
Double Taxation Avoidance Agreement (DTAA) for NRIs:
Residents can avoid paying taxes on the same income in multiple countries by claiming relief under Double Taxation Avoidance Agreement (DTAA) for NRIs, an agreement between countries to avoid double taxation.
When to Report:
Taxpayers must disclose foreign assets held at any time during the relevant calendar year (e.g., for AY 2023-24, disclose assets held from 1st Jan 2022 to 31st Dec 2022). Assets acquired between Jan-Mar 2023 do not need to be reported for AY 2023-24.
Steps for Reporting Foreign Assets:
Penalties for Non-Disclosure or Misrepresentation:
Exceptions:
Enforcement and Penalty Cases:
India has a strong Exchange of Information (EOI) network with foreign countries, enabling the sharing of financial and investment data. The Financial Intelligence Analysis Unit (FIAU) handles data analysis and enforcement.
In a recent case, a couple faced a penalty of INR 10 lakhs for failing to disclose foreign investments made via LRS across four years.
Also Read: Received a Income tax notice, here are reasons why many NRIs are getting notices from income tax department