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Disclose overseas assets: Indian govt to NRIs

The government has made disclosure of foreign assets mandatory in a bid to trace black money
Filing of income tax returns has become more complicated from this year for those having bank accounts or any other assets overseas. The government has made it compulsory for Indian as well as expatriate resident individuals to disclose their overseas assets.

"The overseas assets will not be taxed, but it is an additional hassle for taxpayers," said Neeru Ahuja, partner, Deloitte Haskins and Sells.
Apart from the additional hassle, Ahuja said, expatriate resident individuals find it as an intrusion into their privacy.

"Many people are complaining. Expatriates who have come here to work even for a short period are required to disclose assets back home. It is an intrusion into their privacy," Ahuja told IANS.

The Central Board of Direct Taxes (CBDT) recently notified the new tax return forms for the tax year 2011-12 or assessment year 2012-13, mandating disclosure of foreign assets. In the tax return forms called ITR 2/3, a new section called ’FA’ (Foreign Assets) has been introduced to disclose foreign assets.

As per the notification, individuals having taxable income exceeding Rs.1 million (nearly $20,000) and domestic and expatriate resident individuals with assets located overseas have to file their returns through the electronic mode.

"Resident individuals are required to file tax returns in India irrespective of whether they have income chargeable to tax in India or not," said Ahuja.

As per the Finance Bill 2012, resident individuals having assets, including financial interest in any entity located outside India are required to furnish tax returns electronically from financial year 2011-12 onwards giving complete details of such assets.

In other words, income is not the only criteria to file an income tax return in India now. Those resident individuals who have assets outside the country are compulsorily required to file income tax return, irrespective of whether they have any income generated in India or not.

The government has made disclosure of foreign assets mandatory in a bid to trace black money, which has become a big political issue in the country.

Although there is no official figure, some private research puts quantum of illicit money held by Indians to the tune of $1.4 trillion.

The government recently released a white paper on black money, but did not give any estimate.

The government argues that the mandatory disclosure of foreign assets is aimed at preventing generation and circulation of unaccounted money and tracking undisclosed assets.

However, such a disclosure could cause undue hardship to individuals, especially the expatriates’ family who qualify as residents due to physical presence in India. For example, spouses of foreigners who work in India or Non- Resident Indians (NRIs) returning to India will invariably need to make disclosures of their foreign assets.

"It is not clear how the additional information may be used, but it will cause hardship to genuine tax payers," said Ahuja.