With just days left before the year-end compliance window closes, the Income Tax department has begun reaching out directly to multinational companies, asking them to alert Indian employees about undisclosed foreign assets and income, according to multiple tax advisors.Several large multinationals — including a global consumer healthcare firm, a wireless technology major and a US-based semiconductor designer — have received formal communications from the department, indicating that a number of their India-based employees fall under mandatory foreign asset reporting for the assessment year 2025-26, according to an ET report.In one such email reviewed by advisors, the tax office said it already possesses relevant data and urged cooperation from employers. “Data received indicates that 30 of your employees are subject to mandatory reporting for the assessment year 2025-26. To ensure confidentiality, the department is not disclosing the specific names of the employees in this email. We request your cooperation in ensuring statutory compliance,” the communication stated.The companies have been advised to sensitise staff on the urgency of disclosing overseas assets and income, warning that failure to do so could invite assessment proceedings, a penalty of Rs 10 lakh, and even prosecution under the Black Money law.Tax professionals say many such lapses arise from misconceptions rather than intent. Indian employees of multinational firms often fail to report employee stock option plans (ESOPs), overseas dividends or capital gains, assuming that foreign income will not come to the attention of Indian authorities. However, information now routinely reaches the department through global data-sharing frameworks such as the US Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS).“This places a disproportionate onus on employers, requiring them to monitor and interpret employees’ foreign assets — an area that often extends beyond payroll visibility. The onus of reporting foreign assets in Schedule FA (in the I-T return) rests with the employees. On ESOPs, a longstanding issue that requires clarification from CBDT is whether disclosure is necessary at the time of grant or vesting,” said Ashish Karundia, founder of the CA firm bearing his name, ET quoted.What has surprised advisors is the speed at which the information exchange is now occurring. “The exchange of information is moving at a speed that’s unheard of. The government is getting data within six months of the year-end. The department is sending reminders via SMS and emails, which would help genuine assessees to revise or update returns without getting into litigation. As things stand, residents have no option but to disclose overseas assets in ITRs,” said Rajesh Shah, partner at Jayantilal Thakkar & Co.The outreach forms part of the second phase of the Central Board of Direct Taxes’ ‘NUDGE Campaign’, launched in 2024, which offers taxpayers an opportunity to file revised or updated returns by December 31, 2025. Individuals who earned interest, dividends, rental income or capital gains from unreported foreign assets are being asked to correct their filings.However, experts caution against misplaced reliance on updated returns alone. “There is a misconception that disclosing foreign assets through an Updated Return, or ITR-U, (u/s 139(8A) of the Income Tax Act) provides immunity from the stringent penalties of the Black Money Act. However, a closer reading of Section 43 of the Black Money Act reveals a significant legal gap. Since section 43 does not explicitly recognize an updated Return for penalty waiver, taxpayers relying on ITR-U may still be liable for the ₹10 lakh penalty,” said Mohit Bang, partner at Trivedi & Bang.He added that disclosure and correction before the December 31 deadline would help taxpayers avoid penalties for both non-reporting and tax evasion.The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, which came into force on July 1, 2015, empowers authorities to tax and penalise undisclosed overseas assets, including foreign bank accounts, offshore trusts and unlisted entities with concealed beneficial ownership.
