World
India
The number of Indian taxpayers voluntarily disclosing their foreign assets and income has seen a sharp increase over the past few years. According to government data, nearly 30,161 Indians reported foreign assets worth more than ₹29,000 crores as of September 2024.
Government sources revealed that India has been receiving financial data from over 108 countries, providing insights into foreign accounts and income earned outside India, such as interest and dividends.
Steady Growth in Voluntary Disclosures
The number of taxpayers declaring their foreign assets and income has surged from 60,000 in the 2021-22 financial year to 2,31,452 in 2024-25.
This increase is attributed to extensive awareness campaigns and outreach efforts, which resulted in a 45.17% rise in voluntary disclosures compared to 2023-24.
India’s Role in Global Financial Transparency
India is one of the early adopters of the Common Reporting Standards (CRS) and has been receiving financial information through this system since 2018.
More than 125 countries participate in the automatic exchange of financial data, sharing details about accounts, balances, dividends, and gross payments.
Additionally, India also exchanges similar data with the USA under the Inter-Governmental Agreement of the Foreign Accounts Tax Compliance Act (FATCA), 2010.
Compliance-Cum-Awareness Campaign by the Income Tax Department
Using the data received through CRS and FATCA, the Central Board of Direct Taxes (CBDT) launched a Compliance-Cum-Awareness Campaign on November 17, 2024.
The campaign encouraged taxpayers to declare their foreign assets and income in revised Income Tax Returns (ITRs) for the Assessment Year (AY) 2024-25.
Aiming to be system-driven and taxpayer-friendly, the campaign provided clear instructions on how to fill out Schedule Foreign Assets and Schedule Foreign Source Income. The Income Tax Department (ITD) also shared explanatory materials to help taxpayers understand their reporting obligations.
Proactive Measures to Encourage Compliance
To ensure widespread participation, the ITD sent SMS and emails to 19,501 taxpayers who had high foreign account balances or significant foreign income through interest or dividends above a specified threshold.
Additionally, 30 outreach sessions, seminars, and webinars were conducted across India, engaging over 8,500 participants.
Awareness efforts extended to social media platforms, where informative pamphlets and brochures were shared, along with detailed Samvaad sessions.
Positive Response and Impact of the Initiative
The campaign delivered remarkable results:
- 24,678 taxpayers reviewed their ITRs.
- 5,483 taxpayers filed belated returns for AY 2024-25, declaring foreign assets worth ₹29,208 crore and additional foreign income of ₹1,089.88 crore.
- 6,734 taxpayers updated their residential status from resident to non-resident.
Overall, approximately 62% of taxpayers responded positively, revising their ITRs to disclose their foreign assets and income voluntarily.
A Trust-Based Approach to Tax Compliance
At the core of this campaign is the ‘Trust First’ approach, which prioritizes voluntary compliance over enforcement.
Instead of using intrusive measures, the Income Tax Department placed trust in taxpayers, providing them with ample opportunities to make accurate and complete disclosures.
By fostering transparency, education, and collaboration, this initiative has strengthened India’s tax compliance system. It ensures that taxpayers can proactively correct their filings before any formal verification measures are taken.
This shift towards a cooperative and trust-driven tax framework marks a significant milestone in encouraging responsible financial disclosures while maintaining fairness in India’s tax system.
