As against the existing norm, the new section has been introduced in the Income tax return forms, ITR1 and ITR 2, which now on makes it mandatory for NRIs as well as foreign nationals to report their bank account details held overseas.
The provision until now enables NRIs as well as other foreign citizen to park their undisclosed income abroad which hence does not necessitates its reporting to the tax department in India.
The NR status if held by an individual does not arise tax implication for income realized outside India as well as such individuals are not liable to report his assets in the foreign country in the tax return. The new provision introduced as part of the new section is viewed by some experts as the way in which foreign nationals shall be able to claim the tax refund in their foreign account. But the deemed proposition is not correct as there is no column to add the details of a foreign bank for making the credit in respect of the refund.
Also, through the section, the government aims to put a check on these NRIs and foreign nationals who willfully avoid tax incidence by moving their undisclosed income to the bank accounts in the foreign country. The newly proposed section is valid from assessment year 2017-2018, so those individuals; NRIs and foreign nationals who are filing returns for 2016-17 need to report all such details.