Non-reporting of foreign moveable assets up to Rs 20 lakh decriminalised

Be cautious, taxman could still come after you for wilfully withholding information

The government has announced major tax reforms to simplify procedures and reduce uncertainties. Key changes include de-penalising non-reporting of foreign movable assets up to Rs 20 lakh, shortening the time limit for reopening cases from 10 years to five years. Refunds may also be withheld for up to 60 days during appeals. These reforms aim to ease taxpayers' compliance burden.

Employee Stock Ownership Plans (ESOPs)

ESOPs are offered to Indian professionals working in multinational companies.
The Black Money Act penalises non-reporting of such assets. A proposal in the budget decriminalises the non-reporting of foreign movable assets up to Rs 20 lakh.

 

“Previously, Section 42 of the Black Money and Imposition of Tax Act, 2015, imposed a Rs 10 lakh penalty for failing to accurately report foreign income or assets in tax returns filed by residents in India. The penalty did not apply if the aggregate value of these assets did not exceed Rs 5 lakh at any time during the previous year,” says Kunal Savani, partner, Cyril Amarchand Mangaldas.
 

From October 1, 2024, this threshold will be raised to Rs 20 lakh. “The previous threshold led to penalties exceeding asset values. Professionals receiving ESOPs and investing in foreign social security schemes were particularly affected. This change eliminates penalties for non-reporting of such assets for all residents,” says Savani.

 

However, taxpayers must disclose all assets, regardless of value, to avoid prosecution for wilfully withholding information.