Show Foriegn Assets Dividend but not claim DTAA / FSI

Hey! Your understanding is basically correct and many taxpayers do this for simplicity. Here’s a clear breakdown:

What you want to do:

• Report foreign assets and dividend in Schedule FA (Foreign Assets).

• Report dividend income under Income from Other Sources at normal tax rates.

• Not claim DTAA benefit or Foreign Tax Credit (FTC) by skipping Schedule FSI (Foreign Source Income) and TR (Tax Relief).

• Not apply the special lower rate for dividends under DTAA.

Is this allowed?

Yes, it is allowed.

• You can report your foreign income and assets in Schedule FA and pay tax on the gross dividend income without claiming the DTAA benefit or FTC.

• This means you pay tax at the regular slab rates applicable for dividends in India.

• Since you are not claiming relief, you avoid the complexity and manual processing, but pay higher tax if foreign tax was already deducted.

Points to keep in mind:

• If foreign tax was deducted on dividends, you won’t get credit for it, so effectively you might pay some tax twice.

• You should disclose the foreign dividend income and asset properly in Schedule FA and in the income schedule (Other Sources).

• The Income Tax Department might manually process your return if you claim DTAA or FTC. By skipping those, your return should process faster.

In short:

Have others done this?

Yes, many taxpayers with small foreign income do this for ease of filing and accept paying a bit more tax.