I-T flags 25,000 ITRs with foreign-asset gaps: Here's what happens next

Alerts target taxpayers flagged through global data on undisclosed foreign holdings.

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The Income Tax Department will begin sending SMS and email alerts to around 25,000 individuals flagged for possible non-disclosure of foreign assets in their income tax returns for assessment year (AY) 2025-26, asking them to make voluntary disclosures. According to a report by PTI, these messages mark the start of a targeted compliance effort after foreign jurisdictions shared data indicating gaps in reporting by Indian residents.

 

PTI reported that the department has categorised these individuals as high-risk based on information received under the Automatic Exchange of Information (AEOI) framework. The alerts advise taxpayers to file a revised return by 31 December 2025 if they have omitted any foreign asset or foreign-source income.

 

A second round of communication will begin from mid-December to cover additional cases. PTI added that large corporates with employees holding foreign assets are being engaged to raise awareness, along with professional bodies such as the ICAI.

 

How does the department identify non-disclosure?

India receives financial account information from partner jurisdictions under the Common Reporting Standard (CRS) and from the United States under FATCA. This data helps the department check whether taxpayers have accurately completed Schedule FA (foreign assets) and Schedule FSI (foreign-source income).

 

PTI highlighted that analysis of FY 2024-25 information revealed a number of cases where foreign holdings existed but were not reported in ITRs filed for AY 2025-26.

 

Penalties remain severe

Non-disclosure of overseas assets attracts stringent penalties under the Black Money (Undisclosed Foreign Income and Assets) Act, 2015, including:

 

• A 30 per cent tax on undisclosed income

 

• A penalty of 300 per cent on the tax payable

 

• An additional penalty of Rs 10 lakh for failing to report foreign assets

 

PTI reported that up to June 2025, assessments in about 1,080 cases resulted in tax demands of Rs 40,000 crore. Searches in Delhi, Mumbai and Pune unearthed undisclosed assets worth several hundred crores. 

 

Earlier nudges delivered strong results

A similar SMS and email exercise last year led 24,678 taxpayers to revise returns, disclosing Rs 29,208 crore worth of foreign assets and Rs 1,089.88 crore of foreign income, PTI reported.

 

What taxpayers should do now

Taxpayers receiving such alerts, and those who hold any foreign asset, should review:

 

• Overseas bank accounts, property, and investments

 

• Accuracy of disclosures in Schedule FA and FSI

 

• Any income earned abroad, including dividends and interest

 

Filing a corrected return before the deadline can prevent substantial penalties and ensure full compliance with both the Income-tax Act and the Black Money Act. 

 

(with inputs from PTI)