Big relief to taxpayers! If AIS itself reflects foreign assets, you can reconcile it with Schedule FA and avoid mistakes (Notification)

This will be a big relief to taxpayers. If AIS itself reflects foreign assets, you can reconcile it with Schedule FA and avoid mistakes. It was long overdue.

The Central Board of Direct Taxes (CBDT) has permitted foreign financial informa-tion received under tax treat-ies (DTAAs) to be reflected in the assessees’ Annual In-formation Statement (AIS) and Form 26AS.

This means overseas fin-ancial information will now show up in the tax records of an assessee.

Tax authorities can better match foreign income with the ITR. This will also help the assessees to disclose overseas income and assets correctly.

In two orders, CBDT au-thorises uploading of in-formation received under AEOI (automatic exchange of information) framework under respective DTAAS (Double Taxation Avoidance Agreement).

Accordingly, the informa-tion received needs to be up-loaded in the AIS within 90 days from the date of the end of month in which the in-formation was received.

Amit Maheshwari, Man-aging Partner at AKM Global, called this move a significant step towards en-hancing tax transparency and voluntary compliance.

REAPDILY ACCESSIBLE

“By making foreign financial information readily access-ible to taxpayers, the initiat-ive not only enables indi-viduals to reconcile and accurately report their over-seas income and assets but also strengthens the Income Tax Department’s data-driven compliance frame-work,” he said.

According to Ashish Me-hta, Partner at Khaitan & Co, the two orders create a framework for reflecting in-formation received under the automatic exchange of information mechanism in statements easily accessible

This means overseas financial information will now show up in the tax records of an assessee

by taxpayers. “In practical terms, taxpayers should ex-pect greater visibility of for-eign account and related in-formation already available with the tax department, making timely reconciliation and accurate disclosure even more important,” he said.

WORD OF ADVICE

Experts also have word of ad-vice for taxpayers. “Taxpay-ers with foreign bank ac-counts, investments, or other reportable financial as-sets should proactively re-view their AIS and Form 26AS and ensure that the corresponding disclosures are appropriately made in their income tax returns to mitigate the risk of future scrutiny,” Maheswari said.

Mehta added that given the serious consequences of non-reporting offshore in-come and assets, this move should encourage better vol-untary compliance.

“The move is also timely in the context of the re-cently-announced disclosure scheme under the Black Money Act and could sup-port greater voluntary parti-cipation once the scheme is operationalised,” he added.