Leveraging data from 108 countries, the Income Tax Department successfully encouraged 30,161 taxpayers to voluntarily disclose foreign assets worth over Rs 29,000 crore. This initiative was part of a special compliance drive aimed at improving financial transparency and tax compliance.
Increased Disclosures and Revised Residential Status
According to government sources, 24,678 taxpayers revised their Income Tax Returns (ITRs), while 5,483 filed belated returns for the Assessment Year (AY) 2024-25, declaring foreign assets totaling Rs 29,208 crore along with additional foreign income of Rs 1,089.88 crore. Additionally, 6,734 individuals updated their residential status from ‘Resident’ to ‘Non-Resident.’
The compliance drive provided taxpayers with a special window from November 16, 2024, to December 31, 2024, encouraging them to accurately disclose their foreign income and assets. Government sources highlighted that 62 per cent of the taxpayers who received notifications responded positively, leading to a substantial increase in voluntary disclosures. The number of taxpayers declaring foreign assets grew from 60,000 in AY 2021-22 to 2,31,452 in AY 2024-25, marking a 45.17 per cent rise compared to the previous year.
How the Government Facilitated ₹29,000 Crore in Declarations
The Income Tax Department achieved this milestone by utilizing financial information obtained through the Common Reporting Standards (CRS) and the Foreign Accounts Tax Compliance Act (FATCA), 2010. The department issued targeted SMS and email alerts to 19,501 taxpayers with high foreign account balances or significant foreign income, urging them to review and update their tax filings.
In September 2024, India received comprehensive financial details from over 108 countries, including foreign account balances and income generated from interest and dividends. This data enabled tax authorities to identify discrepancies and enhance compliance.
India’s Efforts to Combat Tax Avoidance
India has actively pursued measures to curb tax avoidance and strengthen financial transparency through foreign asset disclosures. The early adoption of the Common Reporting Standards (CRS), which allows automatic exchange of financial information among 125+ countries, has significantly bolstered these efforts.
Since 2018, India has been receiving foreign account details, allowing the Income Tax Department to detect inconsistencies and enforce compliance effectively. The government’s “Trust First” approach, emphasizing voluntary compliance over strict enforcement, played a crucial role in securing these declarations, reflecting India’s commitment to fostering financial transparency and accountability in global tax compliance.
