People often go out of India for job or business. When they return home after working abroad for a few years, their economic world has settled there too. Houses purchased there, foreign bank accounts or shares of any foreign company, all these form an important part of your total wealth. But, hiding information about these foreign assets while filing Income Tax Return (ITR) can land you in big legal trouble. According to tax rules, if any Indian taxpayer has any property or income abroad, he will have to give complete information about it in his return. If this is not done, a heavy fine of up to Rs 10 lakh can be imposed under the Black Money Act.
It is now impossible to hide foreign earnings
In today’s digital and connected era, it has become almost impossible to evade tax or hide your assets. Tax experts say that the Indian Income Tax Department is now keeping an eye on your properties in the country as well as abroad. Actually, the Government of India has direct information agreements with many countries of the world. Under this, foreign governments and financial institutions there share data directly with the Indian Income Tax Department.
This simply means that if you have a bank account in any other country, have invested in real estate or have invested money in the foreign stock market, then the department already has information about it. In such a situation, misrepresenting these information while filing returns can prove to be an alarm bell for you.
What are the rules on shares of foreign companies?
If you work in a multinational company and have received shares as a reward from the company, then this tax rule fully applies to you also. Himang Singla, founding partner of SBHS & Associates, has a clear opinion on this matter. He says that if the employees have ESOPs, RSUs or ordinary shares of any foreign company, then it has now become mandatory to give the information about the same to the Income Tax Department.
Not just shares, if you are getting any kind of income from outside India or you have invested money in any foreign mutual fund, then you will also have to declare it in your ITR. Ignoring this will be considered a direct violation of income tax rules.
Fine of Rs 10 lakh
Now the biggest question arises that what will happen if a taxpayer does not disclose these foreign assets intentionally or unintentionally? The answer to this is very strict. In such cases, the Income Tax Department can directly take strict action against the taxpayer under the ‘Black Money’ law.
For the offense of concealing foreign assets and income, a direct penalty of up to Rs 10 lakh can be imposed on the taxpayer. The matter is not limited only to financial fines. If the case is found serious and the amount of undisclosed assets is huge, then the person concerned may have to face a lengthy legal process. This includes strict provisions including going to jail. Therefore, it is wise to enter every detail from foreign bank account to investments honestly while filing your ITR.
Read this also- Even if there is no tax on earnings, you must fill ITR, otherwise a fine of up to Rs 5000 may be imposed.
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