Sending money abroad? Transfers exceeding ₹6 lakh under I-T scanner
The Central Board of Direct Taxes (CBDT) has initiated a comprehensive review process to identify potential tax evasion associated with outward foreign remittances exceeding ₹6 lakh. This move signifies an intensified focus on monitoring high-value overseas money transfers by Indian residents. The decision was prompted by instances where individuals' declared income did not match their foreign remittances and expenditures, as well as shortcomings in the tax collected at source (TCS).
CBDT's new directive for field formations
The CBDT has instructed its teams to begin verifying Form 15CC, a quarterly statement of foreign remittances submitted by authorized dealers to the income tax department. The data from this form, collected since 2016, will be analyzed starting this year. A senior official stated that a comprehensive review was recommended last year and will soon be made available to field formations for the first time.
CBDT's plan to identify high-risk cases
The CBDT plans to compile a list of high-risk cases based on data scrutiny from the 2020-21 fiscal year onward. Field formations have been directed to create a detailed standard operating procedure (SOP) for identifying these cases and submit a list by September 30. The government has set a deadline of December 31 for issuing initial notices to those found with undeclared income.
CBDT uncovers irregularities in foreign remittances
Officials have uncovered irregularities in foreign remittances, including a case where a person with a declared annual income of ₹5 lakh sent ₹15 lakh abroad over three years through multiple dealers to evade mandatory TCS and taxes. Under the Liberalised Remittance Scheme (LRS), the government imposes a 20% TCS on foreign remittances exceeding ₹7 lakh, with certain exceptions for medical and education expenses.
CBDT instructs banks to report forex spends
The CBDT has also directed banks to report total forex spends as a separate category. This will be in addition to total credit card spends, even when not collecting TCS. This information is included in the annual income statement used for income tax assessment. The government increased TCS on foreign remittances under LRS from 5% to 20%, effective October 1, 2023.
