The Income Tax Department has intensified compliance action in the closing months of 2025, targeting taxpayers who may have failed to disclose foreign assets in their income tax returns. Using data received from more than 100 jurisdictions under global information-sharing frameworks such as the Common Reporting Standard (CRS) and FATCA, the department has begun issuing bulk emails and SMS alerts to individuals identified as high-risk.
Taxpayers who receive these communications are being advised to review their filings and, where required, submit a revised Income Tax Return (ITR) by 31 December 2025 to avoid penal consequences.
What qualifies as a “foreign asset”?
A frequent source of non-compliance is the narrow assumption that only overseas bank accounts or real estate qualify as foreign assets. In practice, the definition is much broader. Any asset held outside India during the relevant reporting period must be disclosed, even if it generated no income.
Reportable foreign assets include:
- Immovable property located outside India
- Foreign bank accounts, including dormant or zero-balance accounts
- Financial investments, such as overseas shares, mutual funds, and insurance policies with surrender value
- Employee benefits, including ESOPs, RSUs and foreign pension or retirement accounts
- Digital assets, including crypto and other virtual digital assets held abroad
- Indirect interests, such as foreign trusts or assets held as a joint owner
- Signatory authority, where you have signing rights over a foreign account, even if you are not the beneficial owner
For salaried employees, ESOPs and RSUs are a common compliance gap. Even if shares were sold immediately upon vesting, or the related foreign account earned no interest, the asset is considered “held” during the year and must be reported.
Calendar year vs financial year: a common reporting trap
Another frequent reason for missed disclosures is the mismatch between reporting periods.
While Indian income tax law follows the April–March financial year, global data exchange under CRS and FATCA operates on a January–December calendar year basis. As a result, an asset acquired and disposed of within a calendar year may still appear in information shared with Indian authorities, even if it did not exist at the end of the Indian financial year.
Taxpayers should therefore review foreign holdings from a calendar-year perspective and ensure that Schedule FA in the return aligns with the information available to the tax department.
Who needs to take action?
The obligation to revise returns primarily applies to individuals who are Resident and Ordinarily Resident (ROR) in India. If any foreign asset was omitted from the original return, a revised return must be filed using ITR-2 or ITR-3, even if no income arose from the asset or tax was paid overseas.
Detailed reporting is mandatory for:
- Beneficial owners of foreign assets
- Individuals with signatory authority in foreign accounts
Non-Residents (NR) and Resident but Not Ordinarily Resident (RNOR) taxpayers are generally exempt from foreign asset reporting. However, if such taxpayers receive an intimation, they should still consider filing a revised return to correct the residential status and formally close the matter.
Why timely action is critical
Non-disclosure of foreign assets attracts serious consequences under the Black Money (Undisclosed Foreign Income and Assets) Act. The penalty for failure to report a foreign asset can be ₹10 lakh per year, regardless of whether any tax evasion occurred.
In more serious cases, prosecution provisions may also apply.The window to file a revised return by 31 December 2025 effectively acts as a voluntary compliance opportunity. Once this deadline passes, the department may initiate enforcement proceedings, where explanations based on oversight or lack of awareness are unlikely to be accepted.
Our perspective
With global financial transparency now embedded into tax administration, foreign asset disclosure is no longer optional or low-risk. Taxpayers who receive intimation notices should treat them as a priority compliance matter, conduct a full review of overseas holdings, and take corrective action within the permitted timeline to mitigate exposure.