Income Tax Notice for Undisclosed Foreign Assets? Here’s What Taxpayers Should Do Next
The Income Tax Department has recently sent emails and intimations to several taxpayers who may have failed to disclose their foreign assets or overseas income in their Income Tax Returns (ITR). These communications have caused concern among many salaried individuals and investors, especially those holding foreign company shares, Employee Stock Options (ESOPs), Restricted Stock Units (RSUs), exchange-traded funds (ETFs), or overseas bank accounts.
However, tax experts have clarified that these emails are system-generated intimations, not penalty notices or enforcement actions. Still, they should not be ignored. Understanding why these notices are being sent and what steps to take next is crucial to avoid future complications.
Why Is the Income Tax Department Sending These Emails?
The Income Tax Department has significantly strengthened its foreign data matching and information exchange mechanisms. Through global cooperation agreements, overseas jurisdictions, international custodians, and foreign financial institutions now regularly share financial data with Indian tax authorities.
Based on this information, the department is identifying cases where foreign assets or income may not have been disclosed correctly in ITR filings. If a mismatch is found, a system-generated intimation is automatically sent to the taxpayer seeking clarification or correction.
Tax professionals say that in most cases, these issues arise due to lack of awareness, not deliberate concealment.
No Need to Panic, Say Tax Experts
According to Himank Singla, Founding Partner at SBHS & Associates, taxpayers should not panic after receiving such emails. He explains that these are not raids, scrutiny notices, or penalty orders. Instead, they are informational alerts meant to prompt taxpayers to review their filings.
Importantly, taxpayers still have time to correct mistakes. The deadline to file a revised income tax return is December 31, giving ample opportunity to make necessary disclosures without facing harsh consequences.
Common Mistakes Made by Taxpayers
Many salaried professionals, especially those working with multinational companies, are unaware of the disclosure requirements related to foreign assets. Some common situations include:
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Shares of foreign companies received through ESOPs or RSUs
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Stock-based compensation granted by overseas parent or group entities
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Bonus shares or equity awards from multinational employers
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Foreign bank accounts opened for salary credit or other purposes
Even if tax has already been deducted at source (TDS) on salary income, foreign assets must still be reported separately in Schedule FA of the ITR.
Investors Using Indian Apps Are Also Affected
Another growing group receiving these intimations includes individuals investing in foreign stocks or ETFs through Indian platforms and brokers. Many investors assume that since the transaction is routed through an Indian app or bank, separate disclosure is not required.
Tax experts warn that this assumption is incorrect. What matters is the location of the asset, not the platform used to invest. If the underlying investment is in a foreign company or security, it qualifies as a foreign asset and must be disclosed in the ITR.
Platforms offering global investing options have made overseas exposure easier, but they have also increased the responsibility on taxpayers to comply with disclosure norms.
What Should You Do If You Receive Such an Intimation?
Experts strongly advise taxpayers not to ignore these communications. Here are the recommended steps:
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Stay Calm and Review the Email Carefully
Understand what information the department is flagging. -
Consult a Chartered Accountant or Tax Advisor
Professional guidance can help identify whether there has been a genuine omission. -
Review Your Foreign Holdings
Check if you hold foreign shares, RSUs, ESOPs, ETFs, or overseas bank accounts. -
Collect Accurate Details
This includes acquisition dates, values, income earned, and current holdings. -
File a Revised ITR if Required
If any foreign asset or income was missed earlier, a revised return should be filed before the deadline.
Why Timely Action Matters
Ignoring such intimations can lead to stricter scrutiny later, including penalties under the Black Money Act in extreme cases. On the other hand, timely correction through revised returns generally helps resolve the matter smoothly.
Tax authorities have repeatedly emphasized voluntary compliance. The current approach focuses on nudging taxpayers to correct errors rather than immediately imposing penalties.
Bottom Line
If you have received an income tax email regarding undisclosed foreign assets, there is no reason to panic—but it is equally important not to ignore it. With enhanced global data sharing, the tax department now has better visibility into overseas investments and accounts.
By reviewing your financial details, seeking expert advice, and filing a revised return if needed, you can stay compliant and avoid future tax troubles. Transparency and timely action remain the safest approach in the evolving tax landscape.
