Data has been shared by foreign jurisdiction(s) showing that you held/earned foreign assets/income during Calendar Year 2024. However, Schedule Foreign Assets was not included in your ITR for AY 2025-26…
This communication has been sent via email to various taxpayers over the past weekend. The email highlights that details of foreign assets such as foreign bank accounts, interest, and dividends may not have been reported in their tax returns.
However, this is not an income tax notice. Instead, it’s part of a compliance and awareness campaign launched by the Central Board of Direct Taxes (CBDT). The aim is to assist taxpayers in accurately reporting their foreign assets in their ITRs.
If you fail to disclosure your foreign assets, you will face a penalty of ₹10 lakh under the Black Money Act, in addition to a 30% tax liability or a penalty of up to 300% of your tax amount.
Why was this communication sent?
The primary objective is to remind taxpayers of their legal obligation to disclose all foreign assets and income in their ITR. Non-disclosure can lead to penalties or prosecution under the Black Money Act.
What should you do next?
Check your records: Go through your financial activities for the last financial year. Did you hold or earn any income from foreign assets, like stocks or ESOPs? If yes, ensure these are reported.
Revise your ITR: If you missed reporting anything in your original return, file a revised return before December 31, 2025.
A freelancer exporter of services receives payment from foreign clients via bank transfer and Paypal/Wise. His income is less than 2 lacs which is less than the taxable limit and so did not file ITR.
Is his income “Foreign Source Income” for the above purpose? Does he have to file an ITR now?
The income received by a freelancer is not classified as “Foreign Source Income” under Indian income tax laws because the services are performed in India, even if the payments come from clients located abroad.
Additionally, filing an Income Tax Return is not mandatory if your income does not exceed the basic exemption limit defined in the Income Tax Act. However, filing your income tax return for compliance is always advisable.
Do we need to declare this for every holding? For example, i hold foreign shares but i am in a loss, invested amount is $121, in addition, i did sell some ESOPs over the last couple of years, but i thought that amount is already taxed and balance transferred to my indian bank account. So currently i hold foreign shares worth only about $105, does this mean i need to re-file my returns? Please advise!
Yes, you are required to declare all your foreign shareholdings. If you have sold the ESOPs, you must also disclose them separately in your ITR as capital gains and foreign source income.
It is advisable to revise your ITR to include these shareholding details and the information about the ESOP sales.
Reporting foreign assets and income in your ITR ensures compliance with tax regulations and avoids penalties. Stay informed and file accurately to maintain financial transparency.
Thank you madam,
For FY 2024-25 I am trying to fill FA and have few questions.
I and 45years old and have worked in UK for few years in the past and have a private employers pension fund in UK. Employer contributed to this for this every month for 2 years from 2012-2014. Since I left the UK and employer there is no contribution from employer and I have not paid anything since then but the fund is still there, but I am not going to receive any pension or income until I am 60years old. I have moved to India for last few years and based here for tax purpose.
Should I declare this in FA as an asset during ITR? I have not mentioned this in my previous ITR, will this have any consequence?
As it is not clear which Section should I fill in FA for 2024-25? what details need to be filled as this is not an investment by me but my employers contribution to retirement benefits.
As my income is >1cr should I declare this in AL section as well?
Please find the response as below to your queries:
Yes, it is mandatory to declare any FA held as on 31st December 2024 while filing ITR for FY 2024-25. Since you are holding the same since long time, we would advice to file ITR U for the past 4 years as allowed by Income tax department.
You have to report opening and closing balance of pension fund as on closing date every year in Schedule FA if no new contributions are made.
3. Yes, you have to report in Schedule AL as well.
In case you need our help to file a revised ITR, you can ping us on help@quicko.com and our team of tax experts shall assist you!
You just need to ascertain the foreign assets you hold. For example, if you work in an MNC, any RSUs, ESOPs, or other overseas investments you receive are considered foreign assets and must be reported. The Income Tax Department generally expects you to report all such assets; they may not always specify the exact asset, so start with what you know you own.
hi , I am senior citizen filed IT reurn AY 25-26 well within due date and i got refund also . I had invested in foreign equities during FY 23-24 and promptly reported/ filed IT retun 24-25 and i have sold all the the forign holdings during 23-24 itself and i dont hold any holdings of foreign equities nor i did not get any divident during FY 24-25. Hence i did not reported any transactions of foreign equity for theAY 25-26 and refund also got. Recently i received mail from IT dept asking why you have not reported foreign equity transaction for FY 24-25 AY 25-26 since you have reported foreign equity transaction during the year FY 23-24. Please let me what i have do now ,my CA says ignore as you no transaction as such not reported . But as a honest tax payer i affraid 10 lacs penalty is huge for me . Please advise me what to do to over come this problem .
Foreign assets need to be reported if they were held at any time during the calendar year ending 31st December.
So, even if you sold all your foreign equities during the year, if you held any of them between 1st Jan 2024 and 31st Dec 2024, you must report them under Schedule FA. In such cases, the closing balance would be zero.
Madam i have sold all athe shares before Dec 2024 .I donot hold single stock and i have not recived any dividend . So i have not reported in my IT return FY24-25 and AY 25-26 . So how i can reply to IT authorities to over come this situation. Kindly advise me please
If you did not hold any foreign shares as on 31st December 2024, then you are not required to revise your ITR for AY 2025–26. There is also no separate mechanism to reply to the department in this case.
The only way to respond, if required, would be by filing a revised return. Since you are not required to revise your ITR, no further action is needed from your side.
If you fail to disclosure your foreign assets, you will face a penalty of ₹10 lakh under the Black Money Act, in addition to a 30% tax liability or a penalty of up to 300% of your tax amount.