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  1. Income Tax efiling: Now tax authorities want NRIs, foreign nationals to disclose details of overseas bank accounts

Income Tax efiling: Now tax authorities want NRIs, foreign nationals to disclose details of overseas bank accounts

The Income Tax Department has recently introduced a new section in the tax return forms, asking all non-resident individuals to disclose details of their bank accounts outside India.

By: | Updated: July 30, 2017 2:33 PM
Income Tax efiling, NRIs, NRs, disclose details, overseas bank accounts, ITR 1, ITR 2, I-T lens As per the existing tax laws, an NR is not required to pay any taxes on any income earned outside India nor is he required to report his foreign source assets in his tax return.

Till now a large number of Indians were saving tax by parking their undisclosed income outside India and systematically avoiding to report it to Indian tax authorities by maintaining the status of non-resident (NR). However, they won’t be able to do so from now onwards. For, the Income Tax Department has recently introduced a new section in the tax return forms (ITR 1 & ITR 2), asking all non-resident individuals (including foreign nationals) to disclose details of their bank accounts outside India.

“This change has raised the eyebrows of many taxpayers as well as tax professionals as this is a surprising and sudden move. More so as this amendment in tax form is not having any precedent either in the tax laws or rules. Further, as per the existing tax laws, an NR is not required to pay any taxes on any income earned outside India nor is he required to report his foreign source assets in his tax return. Considering this, it is an obvious question for many as to what is the purpose of introducing this new section in tax return,” says Chetan Chandak, Head of Tax research, H&R Block India.

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A few people feel that this may be just a facility for an NR to claim the tax refund in his foreign account in case if he don’t have a bank account in India. But this argument does not seem to be in line with the changes made in the tax forms as there is still no option to select a foreign bank account for the tax refund. Another thought is that the government is trying to catch hold of those Indians (NRIs) who have parked their undisclosed income outside India and systematically avoiding to report it to Indian tax authorities by maintaining the status of Non-Resident Indian.

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By adding this new reporting requirement, tax department has put many genuine non-residents and foreign nationals (who cannot be called NRIs) in a situation where they will have to unnecessarily report all their financials even though they are doing no wrong. These NRs and foreign nationals also have valid concern about the security and privacy of the data shared, amidst all the speculation about the security of Aadhaar database. “It is interesting to observe that currently it is not mandatory for a non-resident taxpayer to report these foreign bank account and he can still e-file his tax return without filling up this information. But with the Indian government signing bilateral information agreements with many of the tax havens and other countries, it is very likely that this information will flow to the tax authorities very soon. In this case the taxpayer may be subjected to severe consequences if any irregularities are detected at a later point in time,” says Chandak.

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It may be noted that these changes have been made in the tax return forms for AY 2017-18; hence are applicable for FY 2016-17 itself.

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  1. R
    RM
    Jul 26, 2017 at 9:14 am
    I am a US citizen residing in US since 1978. I have a NRO and a NRE accounts in which I maintain total less than 4 lakh rupees. NRO account generates enough interest to justify refund for TDS by my bank. I do not believe, I should have to disclose my US bank account information in order to claim duly earned Indian ITR refund. All I have to request is to issue refund into my NRO account. I should not have to disclose my NRE account since it does not generate taxable income. I maintain NRI accounts for just in case scenario. My Indian CA is recommending to close both accounts in order minimize undue hassel He suggests, when visiting India just bring along some US Dollars.
    Reply
    1. R
      RM
      Jul 26, 2017 at 9:27 am
      I believe, the latest policy is still under construction. Indian government is making rules and refining policy and procedure as they encounter hurdles. Asking to report ANY and ALL non Indian bank account information from NRIs who are no longer Indian citizen, is going to backfire. Many NRIs who do not have any genuine need to maintain NRI accounts, may decide to close them rather than meet this requirement.
      Reply
    2. S
      Santosh Rai
      Jul 24, 2017 at 10:02 am
      So what would the experts recommend: whether non-residents should provide the details of the bank accounts outside of India, especially those who have nothing to hide and pay all the taxes owed fairly and squarely? Concern is that of privacy and risk of this data falling in the wrong hands.
      Reply
      1. T
        Thangavel, Sydney
        Jul 19, 2017 at 12:00 pm
        Previous governments were encouraging NRIs/OCIs to invest in real properties in India. A foreign national (OCI) may have a property and may file income tax return in India for rents received. It is not right to ask them for Aadhar and bank account details in their residing country. We cannot trust anyone in India and security of information is very poor in India. Even government offices share our contact details with others. If this is the tendency why would any one invest in India any more?
        Reply
        1. S
          Sanjay
          Jul 18, 2017 at 11:01 pm
          It's none of Indian government's business if I'm not an Indian citizen to ask my income or bank accounts in a country outside India, I'm not doing any business in India so my answer is f off.
          Reply

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