Question about Declaring Foreign Assets for FY 2021-22
I have a query regarding my wife’s foreign assets. During FY 2021-22, she held US shares in a Vested brokerage account, which amounted to approximately INR 3,500 for the calendar year 2021. However, my Chartered Accountant did not include this asset in the Foreign Assets (FA), Foreign Source Income (FSI), or other relevant schedules. Instead, they only reported a capital gain of Rs 4,653 under “From sale of assets other than at A1 or A2 or A3 or A4 or A5 above,” with no dividend income and just Rs 10 in interest.
Our total income for the Income Tax Return (ITR) was Rs 2,42,000, which is below the basic exemption limit, primarily driven by business income under Section 44AD.
For the subsequent financial years 2022-23 and 2023-24, we have ensured that all relevant schedules for foreign assets and income are completely filled out.
Given this situation, should we file ITR-U for FY 2021-22? Also, could this small amount potentially trigger the Black Money Act?
I appreciate your guidance on this matter. Thank you!
One response
It sounds like you have some concerns regarding the reporting of foreign assets for FY 2021-22, particularly since your CA did not include your wife’s foreign shares in the relevant schedules of your ITR. Here are some considerations based on your situation:
Filing ITR-U: If you have missed reporting foreign assets and believe that it should have been included, you may consider filing ITR-U (Income Tax Return – Update). It is a provision to rectify certain errors or omissions in a previously filed return. Given that your total income is below the basic exemption limit and that the amount in question is relatively minor, this would be a responsible step to ensure compliance and avoid potential issues down the line.
Black Money Act: Regarding the Black Money (Undisclosed Foreign Income and Assets) Act, it primarily applies to large sums of undisclosed foreign income and assets. Since the amount in question is fairly small (INR 3,500 for shares), it is less likely to attract attention under this act. However, it’s always better to err on the side of caution and report properly.
Consult Your CA: Since your CA prepared the ITR, it might be prudent to discuss your concerns with them. They can provide clarity on why the assets were not included and the implications of filing an ITR-U.
Documentation: Keep documentation of your foreign shares and any related transactions handy, as you may need it to substantiate your claim if you decide to file an update.
In summary, while it seems that filing an ITR-U is a reasonable step to ensure compliance, especially given the subsequent years’ accurate reporting, always consult with your CA or a tax professional for tailored advice and to confirm the best course of action for your specific situation.