The Income Tax department has uncovered ₹22,000 crore foreign assets during a special compliance drive. The initiative, launched in November 2024, aimed to identify taxpayers who had failed to disclose their foreign assets and income, ensuring compliance with tax regulations. This drive was based on data obtained through bilateral and multilateral agreements and foreign remittance records, enabling authorities to pinpoint individuals and entities with undisclosed overseas financial holdings.
Objectives of the Special Drive
The primary goal of this compliance campaign was to ensure that individuals and businesses correctly report their income from foreign assets in their Income Tax Returns (ITR). Under Indian tax laws, taxpayers are required to declare all foreign-sourced income, including foreign bank accounts, land holdings, stocks, dividends, and other overseas financial interests. However, many taxpayers fail to do so, either due to ignorance of the law or deliberate tax evasion.
To curb such practices, the Central Board of Direct Taxes (CBDT) initiated this special drive, using data analytics and advanced tracking mechanisms to identify those with undisclosed foreign income. The department also aimed to raise awareness among taxpayers about their obligations under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, which imposes strict penalties for failing to declare foreign assets.
Collection and Analysis of Information as Per Income Tax Department
The data for this campaign was collected through various international agreements and automatic exchanges of information between India and other countries. The Common Reporting Standard (CRS) and Foreign Account Tax Compliance Act (FATCA) provided detailed records of financial transactions involving Indian residents abroad. Additionally, the I-T department scrutinised Form 15CC, a quarterly statement filed by authorized dealers processing overseas remittances.
The process involved:
- Scrutinising Foreign Remittance Data – Identifying high-value transactions and their sources.
- Reviewing Fiscal Year 2020-21 Data – Analysing past tax returns and financial disclosures.
- Comparing with International Reports – Using the Automatic Exchange of Information (AEOI) to match financial data received from foreign authorities.
- Generating a High-Risk List – Shortlisting taxpayers with inconsistencies or suspicious financial activities.
By1 October 2024, the CBDT had prepared a list of high-risk cases and subsequently launched a compliance-cum-awareness campaign in November 2024 to encourage voluntary disclosure.
Taxpayer Response and Voluntary Compliance
The special drive proved highly successful, with taxpayers disclosing foreign assets and income worth ₹22,000 crore. According to tax officials, many individuals voluntarily reached out to correct their past tax filings after becoming aware of the initiative. Notices were sent primarily to those who had not responded to initial emails and SMS alerts.
This approach highlights the I-T department’s shift toward non-intrusive compliance measures, focusing on awareness rather than immediate legal action. However, for those who failed to respond or refused to cooperate, the department initiated further scrutiny and legal action, as mandated by tax laws.
Legal Implications and Penalties for Non-Compliance
Under the Black Money and Imposition of Tax Act, 2015, failing to report foreign assets or income can lead to severe financial and legal consequences. Some key penalties include:
- Penalty of up to ₹10 lakh for not disclosing foreign bank accounts or assets
- Tax evasion charges leading to penalties of 120% of the tax due on undisclosed foreign income
- Prosecution with imprisonment ranging from 3 to 10 years, depending on the severity of the offense
- Additional penalties for misreporting in ITR, as per the provisions of the Income Tax Act, 1961.
To prevent such penalties, taxpayers are advised to fully disclose all foreign assets and income in their ITRs under Schedule Foreign Assets. The recent campaign has also granted a 15-day extension for taxpayers who need to submit international transaction reports, allowing them to rectify any errors.
Future Measures and Ongoing Compliance
Following the success of this initiative, the Income Tax Department is expected to continue strengthening its monitoring of foreign assets. Some anticipated future measures include:
- Stronger International Cooperation – Expanding data-sharing agreements with more countries to track undisclosed assets
- AI-Based Tax Scrutiny – Using artificial intelligence and machine learning to analyse discrepancies in financial declarations
- Stricter Compliance Checks – More frequent audits and targeted investigations on individuals with significant foreign transactions
- Awareness Campaigns – Encouraging proactive disclosures to avoid legal repercussions.
The department’s non-intrusive approach, with rigorous data tracking, ensures that compliance is achieved without excessive harassment of taxpayers. The voluntary compliance rate observed in this drive is a positive indicator that similar initiatives will continue to encourage better tax transparency in India.
Conclusion
The recent special compliance drive by the Income Tax Department has brought to light ₹22,000 crore worth of undeclared foreign assets, marking a significant step toward improving tax compliance and curbing black money. With international cooperation, advanced data analytics, and increased taxpayer awareness, authorities are making it increasingly difficult for individuals and businesses to hide foreign income. Choose Vakilsearch for tax compliance. Talk to a CA right away for more support.
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