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The season for filing Income Tax Returns (ITR) is at its peak. In such a situation, there is often a big confusion in the minds of Indians living abroad (NRIs) and taxpayers having foreign assets whether it is mandatory for them to give complete details of foreign assets in their tax returns? According to tax experts, there is a simple and clear answer to this ‘No’ Is. Just because you are an NRI, you are not required to fill ‘Schedule FA’ (Foreign Assets). It entirely depends on what your income tax is under the Income Tax Act in the relevant financial year. Residential Status What’s going on?
Who has to fill Schedule FA? Understand residential status
According to Indian income tax law, the rule for disclosing foreign assets is determined not by your citizenship but by your tax residency:
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Resident and Ordinarily Resident (ROR): If a taxpayer falls in this category (i.e. ordinary resident of India), then in the ITR for him Filling Schedule FA is 100% mandatory Is. No matter where in the world your property is located, you will need to declare it.
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NRI (Non-Resident Indian) or RNOR (Resident but Not Ordinarily Resident): If you fall under the category of NRI or RNOR under Income Tax rules, under normal circumstances you are required to fill Schedule FA. no need Would have happened.
Therefore, any person holding any foreign asset must calculate his exact residential status just before filing his return.
What information about foreign assets has to be given in Schedule FA?
Taxpayers (in the ROR category) to whom this rule applies are required to provide complete and transparent details of their following foreign assets:
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All bank accounts located abroad (Savings and Current Accounts)
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Custody or depository accounts and deposits in financial companies
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Stocks, Mutual Funds and Bonds of foreign companies
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Any immovable property (such as a house, shop or land) purchased abroad
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Shareholding or any other financial interest in a foreign trust
Important points: This schedule contains not only the details of the asset but also the peak balance of that account during the relevant financial year and the total value of investment. Apart from this, if there is any income or interest from that foreign asset, then it is legally mandatory to show the same in ITR.
Action under ‘Black Money Act’ for giving or hiding wrong information
Tax experts caution that concealing, attempting to conceal or giving false details of foreign assets is considered a very serious economic crime.
On doing so, the Income Tax Department Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (Black Money Act) Strict investigation can be conducted under this. Under this, the taxpayer may face strict legal action like heavy fine, tax and in serious circumstances, jail (prosecution).
It is most important to choose the right ITR form.
If Schedule FA rules apply to you and you are reporting your foreign assets, take special care when choosing the form:
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such taxpayer ITR-1 (Sahaj) Or ITR-4 (Sugam) use of form no way You can, because in these forms there is no option of ‘Schedule FA’ to enter the details of foreign assets.
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Foreign asset holders must ITR-2 Or in case of business income, only other detailed ITR form (like ITR-3) has to be filled.
Final advice from tax experts: Before submitting your final ITR, carefully check your residential status, sources of foreign income and bank statements of foreign assets. With this, your return will be filed flawlessly and the possibility of any kind of scrutiny notice or legal trouble from the Income Tax Department in future will be negligible.