Income Tax Department has recently sent out messages and emails to taxpayers and flagged potential discrepancies. Message also warns the taxpayers of a potential penalty of ₹10 lakh under the Black Money Act. Taxpayers have been advised to check and correct the discrepancies if any by December 31, 2025. If you are one of them, this is the mail. If you have not, it would be wise to double check, just in case.
Copy of mails and messages have started circulating on social media and many have even raised concerns over the same. The Income Tax Department of India has clarified that the communication sent to taxpayers was in regard to the transactions made by them.
ITD has further clarified that the communication is sent to facilitates the taxpayers and inform them of a probable discrepancy in the actual transactions and the ones reported this year. Department reiterates that it is an advisory sent only to the cases ‘where there is an apparent significant gap between disclosures in the ITR & information as received from Reporting Entities’.
This is an opportunity to review the AIS and provide any voluntary correction on the Compliance Portal of IT Department. All concerns can revise the belayed returns for AY 2025-26 by December 31.
₹10 Lakh Penalty and the Black Money Act
The black money act is regarding the disclosure of foreign assets. The accounts were flagged following the data exchange with US authorities. Certain taxpayers were reported to have earned foreign income or assets which had not been reported.
Accordingly the advisory was sent out to the concerned taxpayers, advising them to recheck and make voluntary disclosures. Discrepancy in the figures can under the act lead to a penalty as notified. However, as per the act, the penalty is waived if the value of the undisclosed assets, excluding the immovable property, does not exceed ₹20 lakh. Please note, foreign equity held by Indian taxpayers also falls under foreign assets.
What to Do
The taxpayers can revise their ITRs to avoid penal consequences. To do the same, the portal will remain open till December 31, 2025.
Taxpayers need to login to the income tax e-filing portal and make a fresh filing. The mail further asks taxpayers to use ITR forms other than ITR -1 or ITR – 4. This is because the said forms do not support foreign asset reporting. Typically, in this case, ITR -2 and ITR 3 can be chose – depending on the income sources.
This is especially important for people who have omitted foreign bank accounts, mutual funds and other overseas holding from their income tax returns. Individuals are also advised to get in touch with their Chartered Accountant for advice and assistance in the same. Chartered Accountants have stressed on the importance of compliance in the case and have asked people to review their foreign asset and file necessary returns.