If you have not disclosed foreign assets (FA) or foreign income in your ITR (Income Tax Return), you can still include them by filing a revised return before December 31. The IT Department has asked taxpayers to report foreign assets or income held or earned during the year in their revised ITR.
“If the taxpayer has failed to report his/ her foreign assets and income in his/ her original ITR, there is an opportunity to rectify this through filing a revised return,” according to the IT Department. “The Income Tax Department allows taxpayers to correct any omissions or inaccuracies by filing a revised return. The revised return can be filed up to December 31,” it said.
Here is a primer on what foreign income/assets are and how to file a revised ITR for the same.
What constitutes foreign assets/income?
If a taxpayer has any assets outside of India—such as immovable property, bank accounts, investments, or other assets—or earns income from foreign sources, careful attention must be paid during the ITR process. Salaried assesses who have received shares, restricted stock units (RSUs), bonus shares, and ESOPs (Employee Stock Options) from their MNC employers should clearly state it in their IT returns as they are liable for taxation.
Selecting the appropriate ITR form
Taxpayers must select an ITR form that includes a specific section called Schedule FA (Foreign Assets). “The two simplest Income Tax return forms—ITR-1 and ITR-4—do not contain the required Schedule FA section. Important: Taxpayers with any foreign assets or income should not file using ITR-1 or ITR-4, as these forms lack the necessary reporting schedules for foreign disclosures,” according to the IT Department.
The Income Tax Act requires residents to report their foreign assets and income in their ITR. Specifically, Schedule FA (Foreign Assets) in the ITR form is meant for reporting foreign assets, and Schedule FSI (Foreign Source Income) is for reporting income from foreign sources. Additionally, taxpayers can claim tax relief on taxes paid abroad by filing Schedule TR (Tax Relief) along with Form 67 online.
Schedule FSI: Details of income from outside India and tax relief
Key information to provide
Country code: Use the International Subscriber Dialling (ISD) code of the country where the income originates.
Taxpayer Identification Number (TIN): Enter the TIN of the assessee in the country where tax has been paid. If the country has not allotted a TIN, provide the passport number instead.
Tax relief and DTAA details: If tax has been paid outside India on foreign income and tax relief is being claimed in India, mention the relevant article of the applicable Double Taxation Avoidance Agreement (DTAA).
Form 67 requirement: Ensure that details of foreign tax credit and income are reported in Form 67 to claim the credit in India.
Schedule TR
Schedule TR provides a consolidated summary of tax relief being claimed in India for taxes paid outside India with respect to each country. This schedule consolidates the detailed information furnished in Schedule FSI.
Required entries
Column (a) and (b) — Country Code and TIN: Specify the relevant country code using the International Subscriber Dialling (ISD) code and provide the Taxpayer Identification Number (TIN). If a TIN has not been allotted in that country, substitute the passport number.
Column (c) — Tax Paid Outside India: Mention the tax paid on the income declared in Schedule FSI. This will be the total tax paid under column (c) of Schedule FSI for each country.
Column (d) — Tax Relief Available: Specify the tax relief available, which will be the total tax relief available under column (e) of Schedule FSI for each country.
Column (e) — Provision of Income-tax Act: Specify the provision under which tax relief is being claimed—namely, section 90, section 90A, or section 91.
Schedule FA: Details of foreign assets and income from any source outside India
Residents of India are required to furnish details of any foreign assets in this schedule. In case you are a resident in India, the details of all foreign assets or accounts in respect of which you are a beneficial owner, a beneficiary, or the legal owner, are required to be mandatorily disclosed in the Schedule FA.
Taxpayers must furnish details of foreign assets or accounts of the following nature, held at any time during the relevant calendar year ending on December 31
Table A1 — Foreign depository accounts
Accounts held in foreign depositories, including peak balance, closing balance, and gross interest paid or credited during the calendar year.
Table A2 — Foreign custodian accounts
Accounts maintained with foreign custodians, including peak balance, closing balance, and gross amounts paid or credited (specified by type: interest, dividend, proceeds from sale, or other income).
Table A3 — Foreign equity and debt interest: Investments in foreign equities and debt instruments, including initial value, peak value, closing value, gross interest paid, total gross amounts paid or credited, and proceeds from sale or redemption.
Table A4 — Foreign cash value insurance or annuity contracts: Insurance or annuity contracts held abroad, including the cash or surrender value as at year-end and total gross amounts paid or credited during the calendar year.
Table B — Financial Interest in Any Entity Outside India: Details of holdings in foreign entities, including investment value at cost, nature and amount of income accrued, and the portion of foreign source income chargeable to tax in India, along with the relevant ITR schedule where income was offered to tax.
Table C — Immovable property outside India
Details of foreign immovable property holdings, including investment value at cost, nature and amount of income derived, and the portion chargeable to tax in India, with reference to the relevant ITR schedule.
Table D — Other capital assets outside India
Details of other capital assets held abroad (excluding stock-in-trade and business assets), including investment value at cost, nature and amount of income derived, and the portion chargeable to tax in India.
Table E — Foreign accounts with signing authority
Details of foreign accounts in which the taxpayer holds signing authority but are not reported in tables A1 to D, including peak balance or total investment value at cost.
Table F — Trusts created outside India
Details of trusts established under the laws of a country outside India in which the taxpayer serves as trustee, beneficiary, or settlor, including the amount of income derived from such trusts that is chargeable to tax in India.
“All peak balances, values of investment, and amounts of foreign-sourced income must be converted into Indian currency using the telegraphic transfer buying rate of the foreign currency as on the relevant date: the date of peak balance in the account, the date of investment, or the closing date of the calendar year ending on December 31,” the IT Department said.
“The telegraphic transfer buying rate, in relation to a foreign currency, is the rate of exchange adopted by the State Bank of India for buying such currency,” it said.
“Failure to report foreign assets and income can attract assessment and also stringent penalties and prosecutions under the Black Money (Undisclosed Foreign Income and Assets) and ‘Imposition of Tax Act, 2015’. It is crucial for taxpayers to comply with these regulations to avoid legal consequences,” the IT Department said.
Allirajan M is a journalist with over two decades of experience. He has worked with several leading media organisations in the country and has been writing on mutual funds for nearly 16 years.
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