Indians spending 182 days abroad every year to legitimise their money stacked in bank accounts in other countries and evading the scenario of being taxed by claiming NRIs’ status may soon be a thing of the past. The government, it is learnt, has tweaked reporting norms by adding provisions to the ITR forms that would now require Non Resident Indians to furnish details such as account numbers in overseas banks, name of the banks, countries where the bank offices are located as well as the Swift codes and International Bank Account Numbers (IBAN).
This new provision will come into effect this year which was introduced by Income Tax authorities a few days ago. This will make it difficult for NRIs’ to claim funds lying in offshore accounts as lawful income earned abroad. Most NRIs’ include even those who have been away for years, file tax return in India to cover their income from stocks, properties and fixed income instruments like bank deposits and bonds.
As per the latest norms, only resident Indian had to share details of the offshore bank accounts with tax authorities. But now the provisions will apply to NRIs’ as well. The new clause incorporated by the government is believed to be based on the understanding that many Indians have moved money from jurisdictions like Switzerland to newly opened bank accounts in destinations such as Dubai, Singapore and Hong Kong.
Meanwhile, efforts in this direction were started last year when the Enforcement Directorate had questioned many NRIs over the source of their funds. While NRIs’ have often resorted to furnishing details limited to the accounts they hold in India while filing returns online, inability to explain assets and fund movements – a violation of the Foreign Exchange Management Act – exposes a person to penalty and could even invite cases of money-laundering by the ED. However, one issue that could prove a sticking point is the absence of a circular or notification to back the change in filing norms.