Ayush
Overview
Income Tax Department now not only track Indian income but also foreign assets and income. If a resident taxpayer fails to disclose foreign assets in ITR, a penalty of up to Rs.10 lakh can be imposed under the Black Money Act.
Types of Foreign Assets or Income to Disclose
You must disclose:
- Foreign bank accounts - if any account held abroad.
- Foreign dividends - earning from foreign stocks or ETFs.
- Foreign salary - working for foreign entity.
- ESOPs/RSUs - Shares of foreign companies.
- Social Media Income - Direct payout from abroad.
- Immovable property - Real estate ownership.
- Export income - Services or Goods billed to foreign clients directly.
Where to Report Foreign Assets or Income?
Schedule FA in the IT Return can be used to disclose foreign assets and foreign income, even if there is no tax payable.
- Foreign assets: Reporting based on calendar year (up to 31 Dec)
- Foreign income: Reporting based on financial year (up to 31 March)
How To Report Foreign Income and Assets?
Foreign income must be reported in three places for compliance:
Relevant income head (for tax calculation): Classify correctly (such as - Profits & Gains from Business/Profession (PGBP) for freelance, Other Sources for YouTube). This affects tax computation.
Schedule FSI (Foreign Source Income): Mandatory for financial year basis foreign income only. No assets reporting required.
Schedule FA (for disclosure): Foreign income and separate tables for assets.
Additional Schedules (If Applicable)
- Schedule TR and Form 67: If tax is already paid abroad, file Schedule TR and submit Form 67 to claim DTAA relief.
- Schedule AL: If total income is above Rs.1 crore, foreign assets must also be reported in Schedule AL (Assets & Liabilities).
Penalties
| Section | Penalty Amount | Reason |
| Section 42 | Rs.10 lakh | If no ITR filed |
| Section 43 | Rs.10 lakh | ITR filed but Schedule FA omitted |
Exemptions
- If assets (such as bank account) below Rs.20 lakh, then no penalty will be levied. Note - This relief is not applicable to immovable property.
Non-Residents (NR) or Resident but Not Ordinarily Resident for the financial year – No Schedule FA required. - Immovable property – Always report (no threshold)
How IT Department Tracks Foreign Assets?
Income Tax Department tracks foreign assets via international agreements:
FATCA – Mandatory reporting by US financial institutions about accounts held by Indian residents.
CRS – Global exchange of financial data.
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