ITR Filing Guidelines for Holding Foreign Assets

If you’re a resident holding foreign assets or a bank account, it’s crucial to disclose these in your Income Tax Return (ITR). Here’s a comprehensive guide on what you need to know and report:

Relevant ITR Forms:

• ITR-2 & ITR-3: These forms include a Foreign Assets (FA) schedule.
• FA Schedule: Must be filled for assets held during the calendar year 2024.

What to Disclose:

1. Income Earned from Foreign Assets:
   • Dividends
   • Interest
   • Sale proceeds, etc.
2. Types of Assets to Report:
   • Shares and Debentures: Held outside India.
   • House Property: Located outside India.
   • Financial Interests: Partnerships in foreign firms or LLPs.
   • Signing Authority: Over foreign bank accounts, trading accounts, Demat accounts, etc.

Compulsory Reporting:

• Regardless of whether income is earned from these foreign assets.
• Both legal and beneficial ownership must be reported.

Consequences for Non-Reporting:

• Penalty: Up to ₹10 lakh for non-reporting.
• Imprisonment: Ranging from 6 months to 7 years.

Additional Insights:

1. Regulatory Compliance:
   • Ensuring compliance with the Foreign Exchange Management Act (FEMA) and other regulatory bodies is vital.
2. Double Taxation:
   • Check if your foreign income is subject to double taxation and if you can avail of any relief under the Double Taxation Avoidance Agreement (DTAA).
3. Global Reporting Standards:
   • Be aware of global reporting standards like the Common Reporting Standard (CRS) which mandate financial institutions to report foreign financial accounts to tax authorities.

Tables for Better Understanding:

Double Taxation Avoidance Agreement (DTAA):

Reporting Standards:

For more detailed information, always consult with a tax professional or refer to the latest notifications from the Income Tax Department. This ensures you stay updated with any changes in the reporting requirements and avoid any potential penalties.