Explained: Do NRIs need to disclose foreign bank accounts in Indian tax returns?

Filing income tax returns in India can be confusing for Non-Resident Indians (NRIs), especially when it comes to disclosing foreign bank accounts. A clarification issued by the Income Tax Department on July 24, 2017, helped clear up this confusion. Here is a detailed explainer on when NRIs are required to disclose their overseas bank accounts and when they are not.

In the clarification, the Income Tax Department confirmed that Non-Resident Indians (NRIs) are not required to disclose their overseas bank account details while filing income tax returns in India, unless specific conditions apply.

The department stated that NRIs who are not claiming a refund, or who are claiming a refund but hold an Indian bank account, do not need to mention their foreign bank account in their income tax return. The refund amount generated after processing an income tax return is credited directly to the taxpayer’s bank account. For this, providing valid bank account details is compulsory.
NRIs who do not have an Indian bank account and wish to claim a refund faced issues previously, as return forms did not include a column for foreign account information. “Based on the representations received from NRIs, the Income Tax Department provided the facility for reporting the foreign bank accounts in the return forms in order to claim refunds,” the department said.

According to the clarification, NRIs must provide details of their foreign bank accounts only in two specific cases:

• When they do not have an Indian bank account and are claiming a refund.

• When they earn income taxable in India—such as rent from property—and such income is credited directly to their foreign bank account. In this case, disclosure of the foreign account in the income tax return is required.

The department’s clarification is aimed at easing the filing process for NRIs and removing ambiguity regarding financial disclosures linked to overseas assets.