Foreign Asset Non-Disclosure Triggers ₹10 Lakh Penalty Risk: Income Tax Dept urges AY 2025-26 ITR Revision by Dec 31
The communication warns of a ₹10 lakh penalty under the Black Money Act for failing to report overseas holdings and urges taxpayers to revise their ITRs by December 31.
Recently, the Income Tax Department has begun issuing targeted emails to taxpayers flagged for potential non-disclosure of foreign assets in their Income Tax Returns (ITR) for Assessment Year (AY) 2025-26.
The alert follows data exchange with U.S. authorities, indicating that certain Indian taxpayers held or earned foreign assets or income during Calendar Year 2024 that were not reported in their filed returns.
The Department’s communication, as seen in a sample email circulating on social media, warns taxpayers of a ₹10 lakh penalty under the Black Money Act for failure to disclose foreign assets. However, the penalty is waived if the aggregate value of such undisclosed assets, excluding immovable property, does not exceed ₹20 lakh.
The email urges recipients to revise their ITRs by December 31, 2025, to avoid penal consequences and outlines a step-by-step guide for initiating the revision process via the e-filing portal.
To revise the return, the taxpayer must log in to the income tax e‑filing portal, navigate to the “Income Tax Return” section under e‑File, and select “File Income Tax Return” for AY 2025–26. A fresh filing must be initiated by choosing the correct status (individual/HUF/others)
Importantly, the Department’s email specifies that taxpayers must use ITR forms other than ITR-1 or ITR-4 for revision, as these simplified forms do not support foreign asset reporting. Taxpayers are advised to select the appropriate form, typically ITR-2 or ITR-3, depending on income sources.
The alert has triggered concern among professionals and taxpayers alike, especially those who may have inadvertently omitted foreign bank accounts, mutual funds, or other overseas holdings from their tax returns or other disclosures. Chartered Accountant Chirag Chauhan, who shared the alert on social media, stressed the urgency of reviewing foreign asset declarations and revising returns where necessary.
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