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New rules require disclosure of foreign assets

Posted @ July 20, 2012, 9:30 pm under (Expat taxation)


With increased global mobility, India has a large number of foreign nationals / Persons of Indian origin working in India. India has a large foreign student community as well. Given that these individuals/their accompanying spouses could have assets overseas, a reporting requirement will be triggered where these individuals are considered “resident in India”.
Accordingly, a foreign national / his or her spouse / a student having overseas bank account or investments would be covered under this reporting requirement if their presence in India exceeds 182 days even in the first year of arrival to India.
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.
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.

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