CBDT’s nudge leads to disclosure of over ₹29,000 crore of foreign assets
Summary
- India has been receiving details of assets and income parked abroad by Indians under different information-sharing frameworks.
- Based on that information, it urged taxpayers to declare their foreign assets and income in revised income tax returns for the assessment year 2024-25.
NEW DELHI : A compliance drive launched in November 2024 by the Central Board of Direct Taxes (CBDT), based on financial information received from foreign tax authorities, has led to more than 30,000 persons declaring previously unreported foreign assets worth ₹29,208 crore and additional foreign income of ₹1,090 crore, a person with direct knowledge of the matter said.
The information received in September 2024 from over 108 countries included foreign accounts and income in the form of interest and dividends earned outside India, the person said on the condition of anonymity.
Also Read: India’s tax authorities should work harder to make peace with taxpayers
Moreover, 6,734 taxpayers revised their residential status from resident to non-resident as a result of the nudge, the person said.
Tax data-sharing frameworks
India has been receiving details of assets and income parked abroad by Indians under different information-sharing frameworks, such as the Organization for Economic Cooperation and Development’s common reporting standards (CRS) and a data-sharing deal with the US government.
Under the CRS, India has received information for the period starting 2016. The deal with the US is based on the US government’s Foreign Accounts Tax Compliance Act (FATCA) of 2010.
Using this data, the CBDT urged taxpayers to declare their foreign assets and income in revised income tax returns for the assessment year 2024-25, the person said, adding the authority followed a taxpayer-friendly approach and offered a step-by-step guide to reporting these assets and income.
Also Read: Mint Explainer: Can capital gains make you ineligible for a tax rebate?
Over 19,500 taxpayers with high foreign account balances or significant foreign income from interest or dividends were sent text messages and emails requesting that they revise their tax returns to reflect these.
As a result, 24,678 taxpayers reviewed their income tax returns and 5,483 taxpayers filed belated returns for the 2024-25 assessment year, the person said.
About two-thirds of the nudged taxpayers responded positively, voluntarily revising their tax returns to declare foreign assets and income, the person said.
Voluntary compliance
The number of taxpayers disclosing foreign assets and income on a voluntary basis has steadily grown from 60,000 in the 2021-22 assessment year to 231,452 taxpayers in the 2024-25 assessment year. This year, due to extensive outreach and awareness efforts, voluntary disclosures witnessed a significant 45% growth compared to the last assessment year, the person said.
“At the heart of this campaign lies the trust first approach, which prioritises voluntary compliance over enforcement," the person said.
Also Read: New income tax bill provisions grant wide search powers to authorities, make privacy of taxpayers vulnerable
“Instead of immediate verification or intrusive actions, the income tax department trusted taxpayers first, giving them ample opportunity to make true and complete disclosures of their foreign income and assets. By fostering transparency, education, and cooperation, the initiative has reinforced a compliance-friendly tax environment, ensuring that taxpayers can correct their filings proactively before any formal verification measures are undertaken," said the person.
Queries emailed to the finance ministry and to the CBDT on Thursday seeking comments for the story remained unanswered at the time of publishing.
