The probe is being conducted to pertain to an investment in any overseas funds, beneficial interest in trusts and foreign banks as well. 

Non-resident Indians (NRI) are being called to the  Income Tax Department to investigate their associations with foreign financial entities, who have been asked to furnish information regarding foreign accounts, The Hindu Businessline reported. The department has also asked to submit their residential status from the time of opening along with passport copies dated to the origin. The probe is being conducted to pertain to an investment in any overseas funds, beneficial interest in trusts and foreign banks as well.

As per the reports, NRIs have been notified with the summons to the non-residents for the past several years on account of the information received from foreign jurisdictions. Siddharth Banwat, Partner of S Banwat & Associates said that the encumbrance is upon the individual who has been called to provide calculations for his presence inside and outside the resident’s country (India) along with documents to support it.

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In India, an individual is considered a resident if they stay for at least 182 days in the previous year,  and 365 days in the four preceding years. However, the tax department has been demanding information from NRIs spanning up to 40 years, placing the burden of proof on them to demonstrate their residential status. Binoy Parikh, executive director, of Katalyst Advisors stated that when the provisions of Black Money Act (BMA) are not been levelled on NRIs, the improper responses may lead to several assessments of ex-parte under section 69 that could lead to dealing with unexplained investments.

This means that the NRIs are not required to disclose foreign assets, but the tax department may still issue summons or orders under section 149 of the IT Act, with a reduced time limit of five years. If the assessee fails to provide the required documents, a penalty or addition to income may be imposed, with options for appeal to higher authorities. The experts advise NRIs to maintain proper records, including old passports and proof of foreign investments, to prove their non-resident status and avoid unnecessary proceedings.

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