Important Deadline: Declare Foreign Earnings by December 31 to Avoid Penalties

Indian taxpayers are expected to declare all the foreign earnings or properties they may not have declared as December 31 marks the end of 2024. Those taxpayers would need to file a revised income tax return, known as ITR, for the errors or omissions done in their foreign earnings or property.

Failure to report any foreign income or assets could incur serious penalties and litigation from the Income Tax Department for not disclosing foreign income and assets under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.

Benefits of a Revised Return

Submission before the due date of filing lets the taxpayer:

1. Accurate and complete reporting of all foreign income and assets.

2. Avoiding penalties and legal consequences arising from non-disclosure.

3. Claiming eligible tax reliefs under Indian tax laws or Double Taxation Avoidance Agreements (DTAA).

The department has added that the updated return gives an opportunity to the taxpayers to rectify all the errors or omissions in their original return. For Assessment Year 2024-25, the due date for furnishing a revised return is December 31, 2024.

Reporting Foreign Income and Assets

Taxpayers are required to report foreign assets and income through special schedules included in the income tax forms:

• Schedule FA (Foreign Assets): To report foreign assets.
• Schedule FSI (Foreign Source Income): To disclose income earned from foreign sources.
• Schedule TR (Tax Relief): To claim credit for taxes paid abroad.

These schedules are essential for ensuring accurate reporting and claiming eligible tax reliefs under Indian tax laws and DTAA provisions.

Definition of a Resident Taxpayer

A resident taxpayer is someone who has spent at least 182 days in India during the past year or 365 days during the past four years. Those taxpayers who have not met the criteria for becoming a resident are non-residents or not usually residents and do not need to file declarations of foreign income or assets.

Taxpayers are advised to act promptly for December 31st so as to be within time, in order to avoid penalty and prosecution.