The Income Tax Department (ITD) has launched a concerted effort to ensure that Indian employees of multinational companies (MNCs) disclose their overseas assets as part of the Special Compliance Push. In an attempt to target undisclosed foreign assets, the ITD has urged MNCs to facilitate the collection of this vital information from their India-based employees.
Deadline Looms for Disclosure
The final deadline for employees to declare foreign assets is rapidly approaching, with December 31, 2025 marking the cut-off. Employees who have overseas assets must ensure that these are disclosed to the tax department by this date to avoid penalties and potential legal issues.
This initiative, part of India’s commitment to the Common Reporting Standard (CRS), is aimed at tackling black money and improving transparency in financial dealings.
The Role of MNCs in Facilitating Disclosure
The Income Tax Department has reached out to several large multinational corporations, including global consumer goods companies and technology majors, to assist in ensuring that Indian employees comply with this disclosure requirement. The department’s outreach aims to prevent any further lapses in tax reporting and to ensure smooth compliance with the Foreign Account Tax Compliance Act (FATCA).
Tax professionals have reported that many Indian employees often fail to report foreign stock option plans, dividends, and capital gains because they don’t perceive these transactions as taxable under Indian law. This oversight has prompted the ITD’s direct intervention.
Key Dates and Penalties for Non-Compliance
Employees have until December 31, 2025, to ensure their foreign assets are reported in their Income Tax Returns (ITR). Failing to comply by the deadline will result in penalties under India’s Black Money Act, including the ₹10 lakh penalty for non-disclosure of assets.
The Importance of Timely Reporting
Ashish Karundia, the founder of a leading tax consultancy firm, emphasized the significance of timely reporting. He said, “The government is placing enormous emphasis on foreign asset reporting. Missing the deadline could lead to serious tax consequences.”
How to Ensure Compliance
Employees can verify their disclosure status using the Income Tax e-Filing portal and can update their Annual Information Statement (AIS) to ensure that their foreign assets are duly recorded. The ITD has assured that it will continue monitoring all disclosures and take action against any discrepancies or fraudulent claims.
Final Thoughts: Protecting India’s Economic Integrity
As the deadline draws near, the government is taking a proactive stance to ensure that taxpayers comply with these essential reforms. Ensuring transparency will not only help reduce tax evasion but also position India as a strong player in the global economic landscape. It’s crucial for all Indian taxpayers to verify and update their disclosures before the December 31 deadline to avoid penalties and safeguard their financial integrity.
