A fair amount of work is under way amongst financial
intermediaries in preparing income tax returns for filing in India.
Given the renewed sensitivity and scrutiny of overseas assets of
those filing income tax returns in India, it is worthwhile to
reiterate the items that require mandatory disclosure:
foreign bank accounts, including peak
balance during the year;
quantum of investment in any entity
outside of India;
immovable properties situated outside
India, including total investment therein;
any other asset in the nature of
trusts created outside of India,
either in the capacity of a trustee, beneficiary or settlor.
It is important to note that disclosure is entirely separate
from taxability, and the above, in many cases, could be a mere
information-gathering exercise by the Indian income tax
A number of deterrents are built into India's domestic tax
law to discourage noncompliance with the return filing
interest is chargeable at a rate of 1
percent for each month or part of a month for which a return is
a penalty is imposed if a return is
not filed on or before the last day of the financial year in which
the return-filing due date falls; and
a penalty is imposed at a rate of 100
percent to 300 percent of the tax sought to be evaded for
concealment of income.
The penalties are imposed at the discretion of the tax
authorities. The defaulter is also exposed to the risk of
prosecution and imprisonment for a term ranging from six months to
seven years. Given the current investigations into overseas
"black money," a number of international financial
intermediaries like banks, trust companies and others have been
brought under the investigative machinery to obtain information
under the possibility of being proceeded against as wilful
If you have any questions about the topics discussed in
this Alert, please contact Saionton Basu in Duane
Morris' London office, any of the attorneys in our India
Practice Group or the attorney in the firm with whom you are
regularly in contact.
Disclaimer:This Alert has been
prepared and published for informational purposes only and is not
offered, nor should be construed, as legal advice. For more
information, please see the firm's
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On January 24, 2017, the Central Board for Direct Taxes issued a circular enumerating the Guidelines for Determining the Place of Effective Management (hereinafter referred to as "POEM Guidelines") of a company.
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