Is the CBDT's Scrutiny of Swiss Accounts Leading to Increased Tax Declarations?

New Delhi, June 20 (NationPress): The Central Board of Direct Taxes has announced that it consistently receives comprehensive financial data through international tax cooperation agreements, including 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 reviewed their ITRs, with 5,483 taxpayers submitting belated returns for the assessment year 2024-25, declaring foreign assets worth Rs 29,208 crore and additional foreign income of Rs 1,089.88 crore. Appropriate actions as per the existing laws are being contemplated for those taxpayers who remain unresponsive.

This initiative has led to a remarkable increase in taxpayers reporting foreign assets and income in their ITRs for AY 2024-25. A total of 2.31 lakh taxpayers declared their foreign assets and income, marking a significant 45.17 percent rise from 1.59 lakh taxpayers in AY 2023-24, as stated by the CBDT.

Moreover, SMS and emails have been dispatched to numerous taxpayers urging them to reassess their ITRs, particularly where foreign assets and income were inadequately reported in the relevant schedules.

This announcement follows various media reports indicating an increase in funds deposited in the bank accounts of Indian entities in Switzerland. The data reportedly encompasses various types of funds, including those from enterprises, banks, and individuals.

In this regard, it has been emphasized that to tackle offshore tax evasion, tax jurisdictions collaborate and share critical information regarding financial assets held by foreign citizens within their jurisdictions.

As part of these arrangements, India routinely receives data about such foreign accounts and assets from over 100 tax jurisdictions. Information regarding foreign assets and income maintained in Switzerland is also acquired through various information exchange mechanisms.

Additionally, Switzerland has been providing annual financial data concerning Indian residents since 2018 under the AEOI framework. The initial data was transmitted to the Indian authorities in September 2019, and this exchange has been ongoing, including accounts suspected of financial irregularities.

The CBDT routinely conducts systematic reviews of the data received, identifying taxpayers whose cases necessitate further scrutiny. This verification is carried out through various methods, including search and survey operations and open inquiries.

It has been observed that due to increased awareness initiatives and a structured approach, taxpayers are willingly declaring their foreign assets and income and are revisiting their ITRs to correct their declared income.