Have You Reported Your Foreign Assets in Your Income Tax Return?

Foreign Assets

Have You Reported Your Foreign Assets in Your Income Tax Return?

Foreign Assets

In an increasingly globalized world, it’s common for Indian residents to hold assets or earn income abroad. However, what many fail to realize is that the Indian Income Tax Act mandates disclosure of foreign assets and overseas income in the Income Tax Return (ITR). Failure to do so—whether by oversight, lack of awareness, or deliberate omission—can have serious consequences.

Let’s take a closer look at what qualifies as foreign assets, the reporting obligations under Indian law, and the penalties for non-compliance.

Who Needs to Report Foreign Assets?

Any individual who qualifies as a Resident in India under the Income Tax Act must report their foreign assets and income while filing their ITR—regardless of the value of such assets.

Foreign Assets

Examples of Common Foreign Assets:

  • ESOPs or Shares allotted by a foreign parent company to employees working in MNCs

  • Bank accounts opened abroad while on temporary work assignments or during overseas education

  • Properties held overseas, even after returning to India

  • Investments in foreign mutual funds, stocks, bonds, or other financial instruments

  • Equity or ownership interests in overseas businesses, such as companies or LLPs

Additionally, any income generated from foreign sources—whether from employment, interest, rent, or capital gains—must also be reported in the ITR.

Foreign Tax Credit (FTC): Avoiding Double Taxation

If you’ve already paid taxes on your foreign income in another country, you can generally claim a Foreign Tax Credit (FTC) in India to avoid double taxation. However, to do so, you must:

  • Offer the foreign income to tax in India in the same financial year

  • File Form 67 along with documentary evidence like the foreign tax payment receipt or TDS certificate

How Does the Government Know About Your Foreign Assets?

This is where the Automatic Exchange of Information (AEOI) comes in.

India is a part of a global network of over 100 countries that have agreed to share financial information about each other’s tax residents. This means:

  • Financial institutions such as banks and investment firms collect information like your name, account details, balance, and income earned

  • This data is shared between tax authorities of the respective countries under the AEOI framework

  • For instance, India shares financial data of U.S. tax residents with the U.S. IRS, and receives similar information about Indian residents from the U.S.

This framework ensures greater transparency and enables Indian tax authorities to verify whether foreign income and assets have been correctly disclosed.

Consequences of Non-Disclosure

Failing to report foreign assets and income can lead to severe penalties under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, also known as the Black Money Act:

1. Monetary Penalty

A penalty of ₹10 lakh per year can be levied if the aggregate value of the unreported foreign assets (excluding immovable property) exceeds ₹20 lakh.

2. Prosecution

Imprisonment from 3 to 10 years along with fines for willful non-disclosure.

3. Tax and Additional Penalties

  • Tax is levied at a flat 30% on the undisclosed income, with no exemptions or deductions allowed.

  • Additional penalties of up to 300% of the tax may also be imposed.

4. Loss of DTAA Benefits

  • Non-disclosure disqualifies the taxpayer from claiming relief under Double Taxation Avoidance Agreements (DTAA) for the relevant income.

Read More: Faking Tax Deductions? You Could Be Penalised Up To 200% Under Income Tax Rules

Whether you’re a salaried employee receiving ESOPs from a foreign company, a student with a bank account abroad, or a returning NRI with overseas investments—reporting your foreign assets and income is not optional. It is a legal responsibility that should not be taken lightly.

If you are unsure about your reporting obligations or need help claiming a Foreign Tax Credit, consult a qualified tax professional. Proactive compliance not only protects you from heavy penalties and prosecution but also builds a credible tax record for the future.

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Claiming DTAA Benefits in India? Form 10F is Now Mandatory

DTAA

Claiming DTAA Benefits in India? Form 10F is Now Mandatory

DTAA

Non-resident taxpayers seeking relief under the Double Taxation Avoidance Agreement (DTAA) must ensure proper documentation and compliance with Indian tax regulations. One critical requirement is Form 10F, which must be submitted along with a Tax Residency Certificate (TRC) to claim DTAA benefits such as concessional tax rates or exemptions.

Why Form 10F is Required Under DTAA

As per Rule 21AB of the Income-tax Rules, 1962, read with Section 90(5) of the Income-tax Act, a non-resident taxpayer must file Form 10F electronically along with a valid Tax Residency Certificate (TRC) issued by the foreign tax authority. These documents collectively serve as evidence to:

  • Prove the tax residency status of the assessee in the foreign jurisdiction;

  • Claim DTAA benefits such as a reduced rate of tax or exemption on specific income;

  • Avoid double taxation or double non-taxation (especially relevant in zero-tax jurisdictions like UAE or Kuwait).

While TRC confirms residency, Form 10F contains additional particulars that are often not included in a TRC.

When Form 10F May Not Be Required

If the TRC already includes all the following details, filing Form 10F may not be necessary:

  1. Status of the assessee (individual, company, firm, etc.);

  2. Nationality (for individuals) or country of incorporation (for others);

  3. Tax Identification Number (TIN) or any unique ID used in the foreign jurisdiction;

  4. Period for which residential status is valid;

  5. Address in the country of residence.

In such cases, the TRC alone may suffice, provided it satisfies all the prescribed particulars.

Electronic Filing of Form 10F: Latest Guidelines

CBDT Notification No. 03/2022 (Dated July 16, 2022)

In a move towards digital compliance, the Central Board of Direct Taxes (CBDT) has mandated electronic filing of Form 10F on the Income-tax e-filing portal. Earlier, Form 10F could be submitted manually, but now it must be uploaded online and verified using the prescribed authentication methods.

Filing Form 10F Where PAN is Available

Steps:

  1. Log in to the Income Tax e-filing portal.

  2. Go to E-file > Income Tax Forms > File Income Tax Forms.

  3. Select the category “Person not dependent on any source of income”.

  4. Locate Form 10F and click “File Now”.

  5. Choose the relevant Assessment Year.

  6. Fill in the required details and upload a copy of the TRC.

  7. Verify using:

    • OTP (linked to Aadhaar),

    • EVC via Net Banking, or

    • Other available electronic methods.

Filing Form 10F Where PAN is NOT Available

For non-residents not required to have a PAN:

Steps:

  1. Visit the e-filing website and click Register.

  2. Under Category, select “Non-Residents not having and not required to have PAN”.

  3. Enter relevant information such as:

    • Taxpayer name and TIN,

    • Date of birth/incorporation,

    • Country of residence,

    • Details and contact of the key person.

  4. After OTP verification (on email and mobile), upload supporting documents:

    • TRC,

    • ID and address proof,

    • Other applicable documents.

  5. Submit Form 10F electronically.

Consequences of Not Filing Form 10F

1. At Deduction Stage by Payer

If Form 10F (and TRC) is not furnished, the deductor (payer in India) may refuse to extend DTAA benefits. As a result:

  • Tax may be withheld at standard or higher rates under the Income-tax Act, not the concessional DTAA rate.

  • In the absence of PAN and valid documents, withholding may be done at a higher rate under Section 206AA.

2. At Return Filing Stage by Non-Resident

If the non-resident assessee files the return directly and claims DTAA benefits without submitting Form 10F and TRC:

  • The Income Tax Department may deny the DTAA relief, leading to higher tax liability or delayed refunds.

  • This can also trigger further scrutiny or notices.

Read More: Avoid a Tax Notice: 10 Key Areas to Focus on When Filing Your ITR for 2024-25

Filing Form 10F electronically is now a critical compliance requirement for non-resident taxpayers claiming DTAA benefits in India. Whether you are a deductor or a non-resident assessee, ensure timely and complete submission of TRC and Form 10F to avoid denial of treaty benefits and unnecessary tax burdens.

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Understanding Form 15CA and 15CB: Your Guide to Foreign Remittance Compliance

Form 15CA

Understanding Form 15CA and 15CB: Your Guide to Foreign Remittance Compliance

Form 15CA

In today’s globally connected business landscape, cross-border payments have become routine for individuals and enterprises alike. However, these transactions are subject to tax scrutiny to ensure compliance with Indian tax laws. To monitor and regulate such foreign remittances, the Income Tax Department mandates the submission of Form 15CA and Form 15CB in specified cases.

These forms act as key instruments for tracking payments to non-residents and ensuring that the correct tax has been deducted at source (TDS), wherever applicable. Moreover, recent trends show that the department has been issuing notices under Section 133(6) and Section 148A based on the information declared in these forms—making it all the more important for taxpayers to understand and comply with the related provisions.

Legal Framework Governing Foreign Remittances

Two main legal provisions govern the compliance related to foreign remittances:

  • Section 195(6) of the Income Tax Act, 1961: Mandates that any person making a payment to a non-resident must furnish information about the transaction, regardless of whether it is taxable.

  • Rule 37BB of the Income Tax Rules, 1962: Details the procedure, forms, and exemptions applicable to such transactions.

What is Form 15CA?

Form 15CA is a declaration submitted by a resident remitter before sending any payment to a non-resident or foreign entity. The form is filed online with the Income Tax Department and must be submitted to the Authorized Dealer (generally the remitting bank) prior to initiating the remittance.

Purpose of Form 15CA

  • To ensure tax deduction at source (TDS) on payments made to non-residents, where applicable.

  • To provide transparency and traceability of foreign remittances.

  • To act as a compliance checkpoint before money leaves India.

Four Parts of Form 15CA

PartApplicability
Part ATaxable remittance not exceeding ₹5 lakh in a financial year
Part BTaxable remittance exceeding ₹5 lakh, and a certificate/order under Section 195(2), 195(3), or 197 is obtained
Part CTaxable remittance exceeding ₹5 lakh, and a Form 15CB (CA certificate) is obtained
Part DRemittance not chargeable to tax under the Income Tax Act

What is Form 15CB?

Form 15CB is a certificate issued by a Chartered Accountant (CA), confirming that the proposed remittance complies with the provisions of the Income Tax Act and relevant Double Taxation Avoidance Agreements (DTAAs).

This form is mandatory before filing Part C of Form 15CA—when the remittance exceeds ₹5 lakh and is taxable.

Key Details in Form 15CB

  • Details of the remitter and beneficiary

  • Nature and purpose of the remittance

  • Currency and amount of remittance

  • Applicability of tax under Indian law

  • Relevant DTAA provisions, if any

  • Rate and amount of TDS deducted

When is Form 15CB Not Required?

You do not need Form 15CB if:

  • The remittance is not taxable under the Income Tax Act.

  • The remittance is ≤ ₹5 lakh during the financial year.

  • A lower/nil TDS certificate has been issued by the Assessing Officer.

Transactions Exempted from Filing Forms 15CA and 15CB

To reduce the compliance burden, Rule 37BB exempts certain transactions from the requirement to file Form 15CA/15CB.

No Filing Required For:

  • Remittances by individuals that do not require RBI approval

  • 33 specified categories of transactions such as:

    • Imports of goods

    • Travel expenses

    • Tuition and education fees

    • Investments abroad

A complete list of exempted categories is available on the Income Tax Department’s website.

Filing Procedure for Form 15CA/15CB

Follow these steps to submit the forms:

  1. Log in to the Income Tax e-Filing Portal.

  2. Go to: e-File > Income Tax Forms > File Income Tax Forms.

  3. Select the applicable form: 15CA or 15CB.

  4. Fill in the relevant details and validate using Digital Signature Certificate (DSC) or Electronic Verification Code (EVC).

  5. Submit the acknowledgment copy to your Authorized Dealer (Bank) before processing the remittance.

Penalties for Non-Compliance

Non-filing or incorrect filing of these forms can lead to:

  • Penalty under Section 271-I: ₹1,00,000 for failure to furnish Form 15CA/CB or for providing incorrect information.

  • Bank refusal to process the remittance in absence of proper documentation.

Practical Tips for Hassle-Free Compliance

  • Always consult a Chartered Accountant for high-value or complex remittances.

  • Maintain records such as invoices, agreements, and Tax Residency Certificates (TRC).

  • Use the latest utility and follow updated guidelines from the Income Tax portal.

Read More: ITR Filing 2025: A Step-by-Step Guide and Important Deadlines

In the evolving regulatory environment, understanding the compliance requirements related to foreign remittances is crucial. Filing Form 15CA and Form 15CB accurately helps avoid penalties, ensures smooth cross-border transactions, and keeps your tax affairs in order. When in doubt, seek professional advice to stay compliant and reduce the risk of scrutiny.

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