Over 30,000 taxpayers declared foreign assets worth more than Rs 29,000 crore following a special compliance campaign launched by the Income Tax Department in November 2024. According to government sources, 24,678 taxpayers reviewed their income tax returns (ITRs), while 5,483 taxpayers filed belated returns for the assessment year 2024-25. The disclosures included foreign assets worth Rs 29,208 crore and additional foreign income of Rs 1,089.88 crore.
Additionally, 6,734 taxpayers updated their residential status from resident to non-resident. Around 62% of the taxpayers who received notifications voluntarily revised their ITRs to accurately report foreign assets and income.
Compliance Campaign and Outreach Efforts
In November 2024, the Income Tax Department urged taxpayers to correctly disclose foreign assets and income in their tax returns. The department initiated an e-campaign to assist taxpayers in updating their information by December 31, 2024.
Under the campaign, SMS and emails were sent to 19,501 taxpayers who had high foreign account balances or significant foreign income from interest or dividends exceeding a specified threshold. The department also conducted 30 outreach sessions, including seminars and webinars, across the country to educate taxpayers about compliance requirements.
Sources reported a substantial increase in voluntary disclosures over the years. The number of taxpayers declaring foreign assets and income rose from 60,000 in the assessment year 2021-22 to 2,31,452 in 2024-25. The department attributed this 45.17% growth compared to the previous assessment year to extensive outreach and awareness initiatives.
Information Exchange and Monitoring
India receives financial data from over 108 countries regarding foreign accounts and income, including details on interest and dividends earned outside India. This information exchange occurs under the Common Reporting Standard (CRS) framework, which India has adhered to since 2018. Over 125 countries in CRS automatically share financial details, including names, addresses, tax IDs, account balances, and income.
Additionally, India exchanges data similar to that of the United States under the Inter-Governmental Agreement in accordance with the Foreign Account Tax Compliance Act (FATCA), 2010. In September 2024, India received financial information covering the previous year, strengthening its ability to verify taxpayer disclosures.
Trust-Based Approach to Compliance
The Income Tax Department has adopted a ‘Trust First’ approach, focusing on voluntary compliance rather than immediate verification or enforcement measures. Taxpayers were encouraged to make full and accurate disclosures without facing immediate scrutiny or penalties.
The campaign’s success reflects the effectiveness of this approach. The initiative strengthens India’s tax compliance framework by prioritising transparency and cooperation, allowing taxpayers to correct their filings before authorities conduct formal verification.
This shift towards a compliance-friendly environment ensures that taxpayers have the opportunity to rectify discrepancies and disclose foreign assets responsibly. The Income Tax Department continues to emphasise education, outreach, and transparency to enhance voluntary compliance and maintain fairness in tax reporting.
Future Implications
The rise in voluntary disclosures indicates increasing taxpayer awareness and the effectiveness of the department’s outreach efforts. The Indian government is expected to continue leveraging global financial data-sharing agreements to ensure tax compliance. Future campaigns may further refine the approach, balancing enforcement with taxpayer assistance to enhance compliance rates.
The Income Tax Department remains committed to facilitating accurate reporting while promoting a fair and transparent tax system. With stricter financial monitoring, Indian taxpayers must comply with disclosure norms to avoid penalties and ensure transparency.
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