Income Tax Department Cracks Down on Undisclosed Foreign Assets
The Income Tax department has announced it has identified numerous high-risk cases where individuals failed to declare their foreign assets in income tax returns for Assessment Year 2025-26. Starting November 28, the department will begin sending SMS and email notifications to these taxpayers, giving them until December 31, 2025 to file revised returns and avoid facing penal consequences.
Learning from Last Year's Success
This initiative follows a similar campaign conducted last year that yielded significant results. During the previous exercise, the department contacted taxpayers identified through the Automatic Exchange of Information (AEOI) framework for holding undisclosed overseas assets in their ITRs for AY 2024-25.
The outcome was remarkable - 24,678 taxpayers came forward to correct their filings, including many who hadn't even received official alerts. This voluntary compliance led to the disclosure of foreign assets worth Rs 29,208 crore and foreign-source income of Rs 1,089.88 crore that had previously gone unreported.
How the Department Identifies Non-Compliance
The Central Board of Direct Taxes (CBDT) receives comprehensive information about foreign financial assets held by Indian residents through two primary channels:
- Common Reporting Standards (CRS) from partner jurisdictions
- Foreign Account Tax Compliance Act (FATCA) from the United States
According to the department's statement, analysis of AEOI information for FY 2024-25 has identified high-risk cases where foreign assets appear to exist but have not been reported in the ITRs filed for AY 2025-26. This data-driven approach helps pinpoint potential mismatches and guides taxpayers toward what the department calls timely and accurate compliance.
Mandatory Disclosure Requirements
The current campaign specifically aims to enhance reporting under Schedule Foreign Assets (FA) and Foreign Source Income (FSI) sections of income tax returns. Accurate disclosure of overseas assets and income isn't optional - it's mandatory under two key legislations:
- The Income-tax Act, 1961
- The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015
The department emphasizes that taxpayers who receive notifications should take immediate action to rectify their filings before the December 2025 deadline to avoid potential legal consequences and penalties under these statutes.
