Recently, the Special Investigation Team (SIT) constituted on black money submitted its first report to the Supreme Court wherein indications are that certain changes like disclosure of foreign travel in a year in income tax return have been suggested.

Over the past decade, Indians undertaking foreign visits have increased manifold due to holidaying, medical treatment, education and business requirements as well as liberalization of exchange controls. While foreign travel expenses incurred for business purposes are tax deductible, personal foreign travel expenses on holidaying, medical treatment and education are not tax deductible. Hence, such personal foreign travel expenses are susceptible to  unaccounted transactions for tax purposes.

The purpose of the purported coverage of the foreign trip in the income tax return seems to be to closely scrutinize the personal foreign travels undertaken by Individuals and whether expenses for the same have been duly accounted by taxpayers. It is worthwhile to note that for this reason, the Income-tax Act had introduced a scheme (later on recognized as one-by-six scheme) which provided six economic criteria including foreign travel which necessitated furnishing return of income even if total income was below the threshold limit. However, the scheme did not work, and the same had to be abolished in 2006.

One of the major challenges tax administration is facing is abundance of data but limited resources to scrutinize the same particularly when a large number of foreign travel expenses are incurred for business purposes by employers. As such, if such reporting is introduced, the tax administration needs to be geared up to meet challenges of data analysis and revalidation with tax returns.

(Above are the views of Dr. Suresh Surana, Founder, RSM Astute Consulting Group)

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  1. Amita says:

    Inclusion of foreign trip details is of no use. It is a wasteful exercise.
    The Senior citizens who take foreign trip for leisure after retirement or go to see their children working/settled abroad will be put into unnecessary harassment particularly by IT people.
    GOI under Mr Modi and IT authorities need to be sensitive on this issue.
    The Hon SC must not allow this!!!

  2. Nagaraj T V says:

    01-10-2014 Bangalore

    Inclusion of foreign trip details is of no use.
    It is a wasteful exercise.

    There is one concept: You know, I dont’t know. This is applicalble
    to Income Tax authorities!

    Income Tax department should achieve this: I know; you don’t know.

    Income Tax has talented pool and they should endeavour to achieve this
    position and finally ensure: I know; You know.

    I can send details if Income Tax authorities are willing to know.

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October 2020