Key reporting requirements
Indian residents must declare the following in their income tax returns:
Global income: Income earned outside India from various sources such as salaries, dividends, or investments.
Foreign bank accounts: Details of accounts where the individual has signing authority or beneficial interest.
Capital and immovable assets: Properties or other capital investments held abroad.
Financial interests: Ownership stakes in foreign companies, partnerships, or other entities.
Trusts: Information on foreign trusts where the individual is a settlor, trustee, or beneficiary.
Depository and custodial accounts: Accounts holding shares, securities, or other financial instruments outside India.
Avoiding common oversights
Amit Pathak, Managing Director at Warmond, highlights common challenges faced by taxpayers.
“Many individuals overlook reporting assets they acquired as non-residents, such as dormant foreign bank accounts or minor investments. These omissions can lead to significant legal and financial consequences,” he explains.
Pathak stresses the importance of proactive reporting
. “Filing accurate disclosures ensures compliance with Indian tax laws and avoids penalties under stringent provisions like the Black Money Act, which can impose fines up to 300% of the tax due on undisclosed foreign income,” he adds.
Steps to ensure compliance
To simplify the process, taxpayers should:
Track all foreign assets: Ensure even dormant accounts or small holdings are included.
Engage tax professionals: Consult experts for clarity on global income and asset reporting.
Review filing requirements: Carefully fill out Schedule FA (Foreign Assets) in the income tax return.
Why reporting matters
Transparent reporting of foreign income and assets is essential for legal compliance and maintaining financial integrity.
With increased scrutiny on global financial transactions, staying compliant with Indian tax laws is more important than ever.
Timely and accurate reporting not only avoids penalties but also builds trust with regulatory authorities.
