Explained: What to do when you receive tax notice on foreign remittances
Source: Business Standard
People make foreign remittances for various purposes, such as paying the education fees of children studying abroad or purchasing assets overseas. The process involves following a set of procedures to ensure compliance with Income Tax regulations.
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When does the Income Tax Department send notice?
Under the Liberalised Remittance Scheme, Indian residents can send abroad up to Rs 250,000 in a financial year without any additional tax. If you sent more than this limit, you may receive a notice to explain the reason for the remittance.
All foreign remittances must be declared in your Income Tax return. Failure to do so may also result in a notice from the Income Tax department.
“You don’t need to worry if you have received tax notice on foreign remittances. Typically, the first notice / intimation requires you to confirm that you have remitted funds overseas, so you should adequately acknowledge the same. Subsequently, you should keep all your documents which substantiate the purpose of such remittance and actual utilisation of those funds for the said purpose,” said Kunal Savani, partner, Cyril Amarchand Mangaldas.
Amit Bansal, partner at Singhania & Co, explained what you should do when you received a tax notice on foreign remittances:
Understand the notice: Carefully read the notice to understand why it was issued. The notice may be about under-reporting or non-reporting of foreign remittances, tax evasion concerns, or issues with documentation.
Check the documentation: Verify the remittance details, including the amount, purpose, and any tax deducted at source (TDS). Ensure that the remittance was done according to the rules, and you have all necessary documentation like Form 15CA/15CB, bank statements, and invoices, said Bansal.
Respond within the deadline: Notices typically include a deadline for response. File a response via the Income Tax department’s e-filing portal within the specified time. Attach all relevant documents to support your case.
Seek professional advice: If you’re unsure about how to respond or if the notice involves large amounts, consult with tax professionals. They can help you draft an appropriate response and ensure all compliance is in order.
Submit additional information if required: If the Income Tax department requests further information or clarification, provide it promptly and accurately.
Ignoring a tax notice can lead to penalties or further action, so timely action is crucial.
First Published: Oct 08 2024 | 5:30 PM IST
