This is aimed at increasing transparency and helping taxpayers reconcile overseas financial information before filing income tax returns.
The order, issued on July 8, authorises the Director General of Income-tax (Systems), Delhi, to upload the foreign financial information received by the tax department into taxpayers’ AIS and Form 26AS.
What is changing?
India receives financial account information from several foreign jurisdictions under international information-sharing arrangements such as the Common Reporting Standard (CRS) and Foreign Account Tax Compliance Act (FATCA)-related exchanges. Until now, this information was available to the tax department but was generally not visible to taxpayers in their AIS or Form 26AS.
Under the latest order, the same information will now be made available to taxpayers through these tax information statements.
Timeline for uploading data
According to the CBDT order:
- Foreign financial information relating to calendar years 2022, 2023 and 2024 already available with the department must be uploaded within 90 days from the date of the order.
- Information for calendar year 2025 will be uploaded within 90 days from the end of the month in which it is received by the tax department.
The Director General of Income-tax (Systems) will separately prescribe the technical standards and operating procedures for reflecting the information in AIS and Form 26AS.
What does it mean for taxpayers?
The change is expected to make it easier for taxpayers to compare the foreign financial information available with the tax department against the disclosures made in their income tax returns.
According to CA Mrinal Mehta, Treasurer, Bombay Chartered Accountants’ Society (BCAS), the order does not expand the department’s powers but increases transparency by allowing taxpayers to see the offshore financial information already available with the tax authorities.
He said taxpayers should download their AIS before filing returns and reconcile foreign account information with disclosures made in Schedule FA, Schedule FSI and Schedule TR, wherever applicable.
Mehta also noted that AEOI data generally reports account balances and gross proceeds on a calendar-year basis and should not be interpreted as taxable income. Similarly, the absence of an entry in AIS should not be treated as proof that there is no reporting obligation, as information from some jurisdictions may be received later.
Foreign assets still need to be disclosed
CA Kinjal Bhuta, Joint Secretary, BCAS, said taxpayers holding offshore bank accounts, foreign investments or other overseas assets covered under India’s tax treaties should ensure that such information is correctly disclosed in their income tax returns.
Tax experts also caution that while the presence of foreign financial information in AIS does not automatically create a tax liability, taxpayers remain responsible for making accurate disclosures under the Income-tax Act.
Failure to report foreign assets where disclosure is required may attract action under applicable provisions, including the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, where relevant.
