Why Reporting Foreign Assets Is Must While Filing Income Tax Return?

While making online income tax payment, one must should mention the foreign assets and properties they are having in other countries. In previous time, it was easy to hide or skip the income generated from foreign assets due to little level of communication.However, with increasing communications between countries, the level of information exchange has been increased gradually. This situation has made many tax payers receive notice from income tax department regarding this.

Not reporting foreign assets during online income tax return filing can lead to legal prosecution against you. In India, such events are prosecuted under the Black Money Act which prescribes higher amount of penalty. The penalty amount can be as high as 10 lakhs of Indian rupees even for a small mistake. There are many situations when individuals who have worked in abroad previously forgets to mention their income while reporting online income tax payment. Also, taxpayers forget to declare their jewelry or other assets that does not generate any income directly.

The foreign assets also include the received money from foreign clients as these incomes are liable to get taxed. This category also includes gifts which are counted as income if not received from prescribed relatives defined in the income tax act. Also, if you have accounts in foreign bank societies than those also need to be declared at the time of online income tax return filing. Even if you have very tiny amount in those accounts, yet they need to be declared while filing tax returns.

The individuals with such income assets must use the ITR-2 form to report income tax return. This form has a separate section called “Scheduled FSI”, where such assets can be mentioned. So, next time do remember to mention foreign assets during online income tax payment filing process to avoid paying big amount of tax penalty.

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