CBDT further clarifies reporting requirement for foreign directorship and foreign assets for filing income tax return for tax year 2018-19

CBDT further clarifies reporting requirement for foreign directorship and foreign assets for filing income tax return for tax year 2018-19

This Tax Alert summarizes recent clarifications issued by the Central Board of Direct Taxes^[1]  (CBDT), vide Circular No. 21/2019 dated 27 August 2019 (Second Circular), in relation to compliance of reporting requirements in the income tax return forms (ITR forms) for tax year 2018-19.

The ITR forms applicable for tax year 2018-19 were notified in April 2019^[2] and they introduced substantive additional disclosures. In relation to additional reporting requirements, various queries were raised by stakeholders to the CBDT^[3] , seeking clarification on the manner and scope of reporting requirements. These included reporting in relation to details of directorship in a foreign company, equity shares listed outside India etc., which were clarified by the CBDT, in the form of frequently asked questions (FAQs), vide Circular No. 18/2019 dated 8 August 2019 (First Circular) ^[4].

Now, the CBDT, vide the Second Circular, has further clarified that individual taxpayers, being non-resident, are not required to provide details of directorship in a foreign company which does not have any income received or accruing or arising in India. Furthermore, details of foreign assets are required to be reported by resident taxpayers only if such foreign assets are held during the tax year in India, as also in the accounting period as per the foreign tax jurisdiction, as defined in the instructions to the ITR Forms.