How Have Global Pacts Aided in Uncovering Foreign Assets of Indian Taxpayers?
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Synopsis
Discover how international tax agreements are transforming financial transparency in India. The government's proactive measures have led to enhanced reporting of foreign assets among taxpayers, making strides in the fight against black money.
Key Takeaways
- Comprehensive data is received from over 100 jurisdictions.
- 24,678 taxpayers reported foreign assets for AY 2024-25.
- Proactive government measures against black money are in place.
- NUDGE Campaign promotes voluntary compliance.
- International cooperation enhances tax transparency.
New Delhi, Aug 4 (NationPress) During a parliamentary session on Monday, it was revealed that the Central Board of Direct Taxes consistently obtains comprehensive financial information through international tax cooperation frameworks, such as the Automatic Exchange of Information (AEOI) with more than 100 jurisdictions including Switzerland. This data is utilized to validate Income Tax Returns (ITRs) submitted by Indian taxpayers.
Consequently, a total of 24,678 taxpayers disclosed their foreign assets and income in revised ITRs for Assessment Year 2024-25, while 5,483 taxpayers submitted belated returns reporting foreign assets amounting to Rs 29,208 crore and foreign income of Rs 1,089.88 crore, as stated by Minister of State for Finance, Pankaj Chaudhary, in the Lok Sabha.
The minister emphasized that the Government of India is actively collaborating with foreign governments for information exchange and has established tax treaties, including Double Taxation Avoidance Agreements, Tax Information Exchange Agreements, the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, and the SAARC Multilateral Agreement. These agreements facilitate mutual administrative support, including tax-related information exchange.
India is also a participant in the AEOI, based on the Common Reporting Standard, allowing it to receive financial account details of Indian residents in other nations with active AEOI relationships. In 2015, India signed an Inter-Governmental Agreement (IGA) with the US for automatic sharing of financial account information.
The government has taken proactive measures whenever credible information regarding black money abroad has been received, whether involving HSBC cases, ICIJ cases, Paradise Papers, or Panama Papers.
These actions include the formation of a Multi-Agency Group for relevant cases, requesting specific information from foreign jurisdictions, bringing illicit funds to taxation under relevant laws, and initiating prosecutions against offenders, the minister noted.
The NUDGE (Non-Intrusive Usage of Data to Guide and Enable) Taxpayers Campaign was initiated by the Income Tax Department in November 2024 to enhance voluntary compliance among taxpayers regarding the declaration of foreign income and assets.
As part of this campaign, informational messages have been sent via SMS and email to selected resident taxpayers regarding their foreign holdings, encouraging accurate reporting of foreign assets and income in their Income Tax Returns, according to the minister.
The existing mechanisms have proven effective in curbing the rise of black money and fostering a unified global initiative to reduce bank secrecy for tax purposes while promoting tax transparency.
These initiatives have been complemented by the digitization and formalization of the economy, further diminishing opportunities for the spread of black money, the minister concluded.
Point of View
I’d like to emphasize that these international collaborations not only enhance tax transparency but also reinforce India's commitment to combating black money. The proactive measures taken by the government reflect a robust approach towards establishing a fair tax environment. It's crucial for taxpayers to engage with these initiatives for mutual benefit.
NationPress
05/10/2025
Frequently Asked Questions
What is the Automatic Exchange of Information (AEOI)?
The AEOI is a global standard for the automatic exchange of financial account information between countries to combat tax evasion.
How many jurisdictions is India collaborating with under AEOI?
India is collaborating with over 100 jurisdictions, including Switzerland, under the AEOI framework.
What are the recent statistics on foreign assets reported by Indian taxpayers?
For Assessment Year 2024-25, 24,678 taxpayers reported their foreign assets, while 5,483 filed belated returns disclosing foreign assets worth Rs 29,208 crore.
What actions has the government taken against black money?
The government has formed a Multi-Agency Group, requested information from foreign jurisdictions, and initiated prosecutions to tackle black money effectively.
What is the NUDGE Taxpayers Campaign?
The NUDGE Campaign aims to improve voluntary compliance for the declaration of foreign income and assets among Indian taxpayers.
