In order to diversify the range of investments, Indian investors more often buy foreign stocks across different exchanges around the world. These investments come under the taxation laws of India and investors must be aware of this. So, if you are an Indian Investor with any foreign assets, you are required to disclose them while filing ITR and pay taxes on every gain. If you fail to do this, the Government may find it adequate to impose a penalty on you.
Disclosing Foreign Assets When Filing ITR
In the ITR form, Schedule FA of the ITR form is to be filed, when an Indian investor owns any foreign assets, to disclose them. Also, any direct or indirect income source from outside India is needed to be mentioned. But if you are a non-resident then you need not mention these types of financial sources.
Benefits And Consequences of Disclosing Foreign Assets To Government
There are some benefits as well as consequences of disclosing your assets owned in a foreign land to the Government, that Dr Suresh Surana, from RSM India, has explained.
As per Indian income tax laws, “every Indian investor is obliged to disclose the details of transactions pertaining to the Capital Gain and Dividend in “Schedule CG” and “Schedule OS” respectively in their Income tax return in India. Moreover, Resident and Ordinarily Resident investors must also furnish the details of such foreign stocks in “Schedule FA” of their Income Tax Return”.
Moreover, the Income Tax authority, “on Non-disclosure of foreign investments in the respective schedules, might issue a notice to the assessee with a contention of undisclosed asset and income and also treat such income tax return as a defective return u/s 139(9) of the IT Act”, mentioned financial express.
Other than this, “The Black Money (Undisclosed Foreign Income and Assets) And Imposition of Tax Act, 2015 (‘BMA’) imposes a more stringent penalty of Rs. 10 lakhs for non-disclosure of a foreign asset in Schedule FA”.