Foreign Asset Disclosure in ITR: What Indian Taxpayers Must Know
If you’re a resident Indian with overseas stocks, bank accounts, or income, foreign asset disclosure in ITR is not optional — it’s a legal obligation. With increasing global data-sharing under FATCA and CRS, the Income Tax Department is closely monitoring offshore holdings. This blog simplifies what to disclose, how to do it correctly, and the consequences of non-compliance.
Who Must Report Foreign Assets in ITR?
You are required to report foreign assets and income in your Income Tax Return if:
- You are an Ordinarily Resident (ROR) in India during FY 2024–25
- You held any foreign bank account, stock, mutual fund, property, or other asset at any time during the year
- You received any income from outside India (even if taxed abroad)
NRIs and RNORs are exempt from this detailed disclosure requirement.
Where to Report: Understanding Schedule FA in ITR
The Schedule FA (Foreign Assets) section in the ITR is specifically designed for reporting overseas holdings. You must disclose:
| Asset Type | Details Required |
|---|---|
| Foreign bank accounts | Bank name, country, account number, peak balance |
| Financial interest (e.g. shares) | Company name, country, investment value |
| Immovable property | Address, ownership share, acquisition cost |
| Trusts or other legal entities | Role (trustee/beneficiary), entity name, country |
This applies whether the asset is in your name or you’re a beneficiary (e.g., trust).
Double Disclosure: Common Mistake to Avoid
Many taxpayers incorrectly assume that reporting foreign income is enough. In reality, there are two separate disclosure obligations:
- Income Disclosure
- Dividends, interest, capital gains must be reported under appropriate income heads
- Foreign dividends usually go under “Income from Other Sources”
- Capital gains from sale of foreign shares go under “Capital Gains”
- Asset Disclosure
- The same asset (e.g. shares held in a U.S. brokerage account) must also be reported in Schedule FA
💡 Expert Tip: Even if no income was earned from a foreign asset during the year, you still need to report its existence.
What About Custodial or Proxy Accounts?
Many investors hold international stocks via platforms like Vested, INDMoney, or Groww in custodian accounts (sometimes called “mint” or pooled accounts). The rule is:
- If the asset is in your name or on your behalf — you must declare it.
- Use the platform’s consolidated statement to report account numbers and peak balances.
- Don’t assume it’s exempt just because the asset is held by a custodian.
👉 CBDT FAQs clarify that beneficial ownership or interest must be disclosed — not just legal title.
Claiming Foreign Tax Credit (FTC): Avoid Double Taxation
If you’ve already paid tax abroad (e.g. on U.S. dividends), you can claim a Foreign Tax Credit (FTC) under Rule 128.
Key FTC rules:
- Credit is allowed only if the income is also taxable in India.
- The credit is restricted to the lower of:
- Tax payable in the foreign country, or
- Indian tax on the same income
- You must file Form 67 before filing your ITR
📝 Pro Tip: Keep foreign tax paid proofs handy — such as 1099s, dividend statements, or brokerage TDS summaries.
Penalties for Non-Disclosure
Non-disclosure of foreign income or assets can lead to:
- ₹10 lakh penalty per default under the Black Money Act
- Reopening of assessments for up to 16 years
- Prosecution in extreme cases
This is a high-risk area. Even innocent omissions due to lack of awareness won’t excuse penalties.
Step-by-Step: How to Report Foreign Assets Correctly
- Determine your residency status (ROR vs RNOR/NRI)
- Collect foreign asset and income details (with dates and peak balances)
- Fill Schedule FA with complete disclosures
- Declare income separately under appropriate heads
- Claim FTC if applicable via Form 67
- Cross-check disclosures before submission
Summary
Foreign asset disclosure in ITR is mandatory for resident Indians with overseas investments. Report in Schedule FA, claim FTC via Form 67, and avoid penalties under the Black Money Act. Non-compliance can attract ₹10 lakh fines and legal action.
FAQ: Foreign Asset Disclosure in ITR
Q1. I invested in U.S. stocks via Groww. Do I need to disclose it?
Yes, if you’re a resident, declare it under Schedule FA and show income (if any) under capital gains or other sources.
Q2. I received $100 dividend and paid 25% U.S. tax. Can I claim credit?
Yes, subject to the ‘lower of’ rule. You must file Form 67 to claim FTC.
Q3. I sold foreign shares at a loss. Do I still need to report?
Yes. Disclosure of the asset is mandatory even if no income or gain was made.
Final Word
Navigating foreign asset disclosure in ITR doesn’t have to be overwhelming. The key is knowing your obligations, documenting everything, and filing accurately. Efiletax helps you simplify global tax compliance — from Schedule FA to Form 67, we handle it all with expert precision.