ITR 2025: Income tax department urges taxpayers to disclose foreign assets, income in their return

In a recent communication, the income tax (I-T) department has urged taxpayers to share details about assets held overseas and income accrued abroad. By disclosing the assets owned in the foreign land in their income tax return (ITR), taxpayers can not only avoid legal issues but also contribute to the country’s development at the same time.

Notably, the tax department in November last year ran a campaign to₹10 lakh penalty”> warn taxpayers of a ₹10 lakh penalty if they fail to disclose foreign held assets or income earned from abroad in their ITR.

It is vital for the taxpayers to disclose their foreign assets and income in their income tax returns, reads the communication. The schedule FA (Foreign Assets) in the ITR form is primarily meant for reporting foreign assets, and Schedule FSI (Foreign Source Income) is meant for reporting income from foreign sources.

What are CRS and FATCA?

Common Reporting Standard (CRS) and the Foreign Account Tax Compliance Act (FATCA) are international frameworks which help battle tax evasion by increasing transparency and cooperation among income tax authorities around the world.

Under these frameworks, the Indian tax department gets access to detailed information about financial accounts held by its residents in foreign jurisdictions. These details include name, address, tax identification number (PAN), account number and balance and income details such as interest, dividends, and other financial proceeds.

These details enable the tax department to evaluate the global income of Indian taxpayers and to find those taxpayers who have not revealed their foreign assets and income.

Relief on taxes paid abroad

The taxpayers can claim tax relief on the taxes paid overseas by filing Schedule TR (Tax Relief) along with Form 67 online.

However, failure to disclose foreign assets and income can lead to strict penalties and even prosecutions per the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, income tax department has revealed in its latest communication.

Advantages of disclosing foreign income

Compliance: Being transparent in declaring foreign assets in tax returns shows a taxpayer’s commitment to compliance and good governance. It also fosters trust with tax authorities and avoids unnecessary scrutiny.

Tax reliefs: Correct reporting enables taxpayers to claim tax relief on taxes paid overseas, thus avoiding double taxation and optimising their tax liabilities.

For all personal finance updates, visit here