Union Budget 2012 proposes that, with effect from tax year 2011-12, every resident individual who has an asset outside India has to file the tax return mandatorily irrespective of income. In other words, income is not the only criteria to file an income tax return in India.
While the Finance Bill is yet to be passed by the Parliament, CBDT brought out the tax return forms (Forms ITR-2, 3 and 4) in line with the above requirements vide Notification No.14/2012 [F.No.142/31/2011-TPL]/S.O. 626(E), DATED 28-3-2012. The new forms that have been notified include a separate schedule wherein the details of foreign assets are to be reported.
The schedule specifically requires the details of bank accounts, financial interest in any entity and immovable property. It also requires the assessee to furnish the details of ‘any other asset’ and ‘accounts where the individual has signing authority’.
It is very interesting to note that the wordings used in the Finance Bill or in the tax return ‘any asset’ is wide enough to cover all assets held by an individual outside India. It should also be noted that they require specific information like peak balance in bank account during the year.
Overseas assets to be disclosed may include the following:
‒ Bank accounts – indicating location of the country, name and address of the bank, the account holder’s name and the peak balance maintained in the account during the year;
‒ Financial interests in an entity – mentioning the country name and code, name and address, and nature of the entity where the interest is held and the total investment;
‒ Immovable property /other asset –country name and code, location of property/asset and total investment;
‒ Details of accounts with signing authority that have not been included in the above together with the name and address of the institution where the account is held, the account holder’s name and the peak balance maintained/investment made during the year
b. Individuals claiming foreign tax relief to mention overseas location’s tax identification number along with details of income earned, taxes paid and relief claimed.
Other additional information required to disclosed
1. Co-ownership details in respect of house property to be furnished [i.e. Name, Permanent Account Number (PAN) and ownership share of co-owners];
2. Long term capital gains calculated with and without claiming benefit of indexation of cost for inflation to be reported separately;
3. Detailed information (name, address and PAN) of done required for claiming deduction in respect of specified donations;
4. Unique Tax Deduction at Source (TDS) certificate Number and Financial Year in which TDS is deducted to be reported for TDS on income other than salary;
5. Reporting of capital investment and percentage share in the profit of the partnership firms introduced in addition to reporting share of income. Share of income to be reported in schedule IF as well schedule EI (details of Exempt Income);
6. Detailed reporting of Unabsorbed Depreciation loss introduced (applicable mainly in case of business income).
Additionally, the electronic filing of tax return has been made mandatory for individuals having total income more than Rs 10 lakh and for a Resident individual who has any asset outside India.