Non Resident Indians who have legitimately escaped tax using their NRI status are under income tax scanner now.
A few days ago, income-tax authorities have added a new provision in the tax return form (ITR2) which will require all non-residents to disclose details of their bank accounts outside India. Most NRIs, 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.
The new clause has been incorporated amid a widely-shared perception that many Indians have moved money from jurisdictions like Switzerland to newly opened bank accounts in destinations such as Dubai, Singapore and Hong Kong.
A person who stays 182 days out of the country every year can enjoy the status of ‘non-resident’. Till now, they can successfully upload online tax return form by holding back information on foreign bank accounts.
Such a possibility is less remote now with many tax havens agreeing to share data. The government 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).
At that stage, non-disclosure of such information could even boil over from the I-T department to the Enforcement Directorate (ED) which is empowered to invoke far harsher laws that deal with money-laundering.
As per ITR2 form, an NRI would be obliged to provide all the bank accounts, and an assessing officer will have the right to ask any question therefrom which have a possible and potential tax claim in India.
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.
However, no circular or notification has been issued by the department clarifying the change in filing norms.
