Enhancing Tax Transparency on Foreign Assets and Income

The Income-tax Act, 1961 mandates residents to declare foreign assets and income through specific schedules in the Income Tax Return (ITR):

• Schedule FA (Foreign Assets): For reporting foreign-held assets.
• Schedule FSI (Foreign Source Income): For detailing foreign-sourced income.
• Schedule TR (Tax Relief): For claiming tax relief under applicable DTAAs.

Non-compliance may lead to severe penalties under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.

Opportunity to Rectify Errors

Taxpayers who missed disclosing foreign income or assets can file a revised return until 31 December 2024 (for AY 2024-25).

Benefits of revised returns:

• Avoid penalties for non-disclosure.
• Ensure accurate reporting for compliance.
• Claim eligible tax benefits under Indian tax laws or DTAAs.

Filling Key Schedules in ITR

Schedule FSI:

• Report foreign income by country and income type.
• Mention the Taxpayer Identification Number (TIN) or passport number.
• Claim tax credits under relevant DTAA articles.

Schedule TR:

• Summarize tax relief claimed for foreign taxes paid.
• Specify the country, TIN, taxes paid, and applicable DTAA section.

Schedule FA: Disclose all foreign assets held during the calendar year, categorized as:

• Depository or Custodian Accounts.
• Foreign Investments (equity, debt, or capital assets).
• Immovable Properties.
• Trust Interests or other beneficial ownerships.

Conclusion

Transparency in reporting foreign income and assets is more than a legal obligation—it reflects a taxpayer’s commitment to compliance and ethical governance. With CRS and FATCA facilitating global data exchange, taxpayers must ensure full disclosure to avoid scrutiny and contribute to national growth. Filing revised returns provides a valuable opportunity for rectifying past omissions. Let this proactive approach build trust and secure legal and financial peace of mind.