CBDT directs AIS to show foreign investments, strengthening tax transparency and compliance

Taxpayers may soon see complete details of their overseas transactions and financial accounts reflected in their Annual Information Statement (AIS). The Central Board of Direct Taxes (CBDT) has introduced a stronger reporting mechanism to integrate foreign financial data, making compliance easier and verification of foreign assets more transparent.

The initiative is designed to foster a healthier relationship between taxpayers and tax authorities, increase transparency and simplify the verification of foreign assets disclosed in income tax returns.

Over the next few years, a more refined compliance system with new features will be added to the official website.

CBDT directs that foreign investment data be added to AIS

In a recent order issued by CBDT on 8 July, the board has authorised the Director General of Income-Tax (Systems), Delhi, to verify and upload financial information received under the AEOI framework into taxpayers’ AIS within 90 days of the end of the month in which the data is received.

The information will be displayed in Form 168, the new AIS introduced under the Income-Tax rules, 2026.

The AIS in this case will serve as a source of information on taxpayers’ income, a consolidated record of their income, all taxes paid and specified financial transactions linked to their PAN.

The CBDT has also instructed the Director General to define the procedures, formats and standards for uploading the information. These will ensure uniform implementation for all taxpayers.

How the AEOI framework works and why it matters

The AEOI framework enables participating countries to exchange financial information on each other’s tax residents every year. Under the Common Reporting Standard (CRS), banks, depositories, investment funds and insurance companies collect account details of foreign residents and share them with their domestic tax authorities, which then transmit the data to the taxpayer’s home country.

Currently, India receives financial information and details about residents from 111 jurisdictions, while it shares similar information with 86 nations worldwide. The CBDT has directed that AEOI information for the periods from 2022 to 2025 will also be uploaded in Form 26AS within the prescribed timelines and the decided format.

For taxpayers with international financial holdings, accurate disclosure in income tax returns will become even more important as the AIS evolves into a more comprehensive compliance tool.

The latest initiative is expected to improve the reporting of foreign assets. While also assisting the income tax authorities in identifying discrepancies and errors between the declared overseas investments and information received from foreign jurisdictions.

For all eligible taxpayers with international financial holdings, accurate disclosure in income tax returns will become even more important as the AIS evolves into a more comprehensive compliance tool.