Mumbai, Nov. 5 -- India's financial institutions could face severe withholding tax penalties, while persistent lapses in international tax reporting could pose risks to the country's sovereign credit rating, a senior Income Tax Department official warned on Thursday.

Speaking to the media on the sidelines of the 'Summit on Global Financial Compliance (FATCA & CRS)' in Mumbai, Debjyoti Das, Principal Director General of Income Tax (Intelligence & Criminal Investigation), highlighted the growing risks associated with non-compliance in cross-border financial reporting.

"It can have certain adverse consequences if we do not address them on time or completely. We can end up with a downward rating for the country," Das said, adding that non-c...