Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
Popular Search: VAT RATES :: due date for vat payment :: TAX RATES - GOODS TAXABLE @ 4% :: ACCOUNTING STANDARDS :: ARTICLES ON INPUT TAX CREDIT IN VAT :: TDS :: VAT Audit :: empanelment :: cpt :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: list of goods taxed at 4% :: Central Excise rule to resale the machines to a new company :: form 3cd :: ACCOUNTING STANDARD :: articles on VAT and GST in India
News Headlines »
 CBDT releases Income Tax Return statistics for last two fiscals
 CBDT issues second round of Certificates of Appreciation to tax payers for their contribution towards Nation building
 FinMin looks at cut in corporation tax
 Draft Rules for prescribing the method of valuation of fair market value in respect of the trust or the institution-Chapter XII-EB of the Income-tax Act, 1961- reg.
 India is moving towards a flawed GST
 ICAI to organise two-day international conference in Hyderabad
 Here's how to calculate tax payable on your capital gains
 Income Tax calculations for the financial year 2016-17
 CPE Events 17 October - 22 October 2016
 High Court raps I-T Department for wrong tax demand
  CBDT signs 5 advance pricing pacts with Indian taxpayers

Income tax department to take closer look at bank accounts, property or stocks abroad
March, 18th 2015

Next time, you will think twice before opening a bank account in Jersey or buying a property in London — even if the transaction is legitimate. Everyone having accounts with offshore banks, or owning properties or stocks abroad will be soon asked a string of questions by the tax office — how the money was earned, how was it transferred, was the Reserve Bank of India informed, and most importantly, what lies beyond the accounts and shareholdings.

The apex body, Central Board of Direct Taxes (CBDT), has directed all tax circles that assessing officers should identify all foreign assets declared in income-tax statements and "examine various aspects related to the foreign assets such as verification of source of investment, taxability of income arising from the assets, etc". The communique reached tax offices 10 days ago.

"These accounts may have been opened under the liberalised remittance scheme (LRS) of RBI and money may have been transferred using proper banking channels, but it may not reveal the full picture," said a senior tax officer on condition of anonymity.

Income tax department to take closer look at bank accounts, property or stocks abroad"What if a person holds $10 worth shares in a shell company which in turn owns assets worth millions of dollars?" said the senior tax officer. In the assessment year 2012-13, individuals were first given the chance to declare their foreign assets when the income-tax department introduced a new column in the tax return form. The recent directive from CBDT comes at a time scrutiny notices, pertaining to that year, are being finalised. "Such cases will be timebarred after March 31, 2015. Now scrutiny notices will be prepared keeping the declared foreign assets in mind," said a tax consultant.

Resident individuals were first allowed in February 20014 to hold accounts with overseas banks, buy properties and invest in securities traded in offshore financial markets. RBI had lowered the eligibility limit for foreign exchange remittances under the liberalised remittance scheme (LRS) to $75,000 in 2013 when the rupee came under pressure, but later raised it to $125,000 in June 2014 when the currency market stabilised.

In February this year, RBI in its monetary policy statement announced the LRS limit was being enhanced to $250,000 per person per year. But some of the state-owned as well as foreign banks in India are reluctant to handle higher remittances with the government yet to come out with a notification to ratify the central bank's decision.


Indications are that many individuals who have declared foreign assets may now receive scrutiny notices. According to the CBDT letter to tax offices, "In respect of other cases also which have been selected for scrutiny, where verification of foreign assets is not mentioned as one of the reasons for selection, the assessing officer should examine the schedule FA (foreign assets) of the income-tax return for similar verification."

According to a senior chartered accountant, while most overseas investments are legitimate, there are instances where the LRS window has been used to float companies in Dubai and other convenient tax-free zones. "Bank accounts of these newly incorporated entities in Dubai have been used to receive funds transferred from Swiss bank accounts.

Between early 2010 and April 1, 2011, when the information-sharing pact between India and Switzerland came into force, a substantial amount of funds is believed to have moved from the numbered accounts to Dubai," said the person. Indeed, the central bank had subsequently turned down several fund remittance applications for setting up new offshore companies. Instead, banks were told to remit funds for investment in existing securities.

"If there are shell companies and holding entities, we do not expect assessees to reveal what all assets are being held. Strictly speaking, they may not be under any compulsion. But then we have to enquire and will have to ask questions," said another tax officer.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Software Outsourcing Company Offshore Software Outsourcing Software Outsourcing Company India Offshore Outsourcing Company India Software BPO Software Business Process Outsourcing Software Outsourcing India Offsho

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions