Disclosure of Foreign Assets in ITR – Schedule FA Explained

Do You Hold Assets in a Foreign Jurisdiction?

In today’s globalized economy, it’s increasingly common for Indian residents to hold assets overseas whether it’s foreign bank accounts, shares, mutual funds, or property. However, with global holdings come domestic tax responsibilities.

If you’re a Resident and Ordinarily Resident (R&OR) individual or HUF in India and filing ITR-2 or ITR-3, you are legally required to report these foreign assets under Schedule FA (Foreign Assets), irrespective of whether any income from such assets is taxable in India.

Failing to disclose these details can invite scrutiny, penalties, and compliance risk under Indian tax laws. This blog outlines what Schedule FA is, why it matters, and who needs to file it. Here is Everything You Need to Know About Schedule FA in Your Income Tax Return.

What is Schedule FA?

Schedule FA is a section in the Income Tax Return (ITR) forms where Indian taxpayers must declare their foreign assets and income. The requirement is part of the government’s broader efforts to ensure tax transparency and detect unreported foreign wealth.

Foreign Assets Include:

• Foreign bank accounts (held solely or jointly)
• Foreign shares and mutual funds
• Financial interest in entities registered outside India
• Immovable property outside India (such as apartments, land)
• Any other foreign asset or authority over such assets (e.g., signing authority)
  

Why is Schedule FA Important?

1. Promotes Transparency

Schedule FA enables the Income Tax Department to keep an accurate and updated record of the global financial footprint of Indian residents.

2. Helps Curb Black Money

Post landmark events like the Panama Papers and Paradise Papers leaks, Schedule FA serves as a vital tool in uncovering undisclosed offshore income and assets.

3. Enables Tax Relief via DTAA

By disclosing overseas income accurately, taxpayers can claim relief under Double Taxation Avoidance Agreements (DTAA), thereby avoiding being taxed twice on the same income.

Who Needs to File Schedule FA?

The requirement to file Schedule FA applies to:

• Individuals classified as Residents and Ordinarily Residents (R&OR) under the Income Tax Act
• Hindu Undivided Families (HUFs) who are R&OR
• Those filing ITR-2 or ITR-3 where foreign asset reporting is relevant
  

You must report if you:

• Hold financial interest in a foreign entity (whether direct or beneficial)
• Possess signing authority in any foreign bank account
• Are a legal or beneficial owner of any foreign asset
• Receive income from foreign sources (including dividends, capital gains, rental income)
  

Owning foreign assets isn’t illegal but failing to report them is. Even if your overseas income is exempt from taxation in India, disclosure under Schedule FA remains mandatory for resident taxpayers. Non-compliance may result in substantial penalties under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.

Need Help with Foreign Asset Disclosure?

If you’re unsure about how to correctly disclose your foreign assets in your Income Tax Return or need assistance with filing Schedule FA, our experts are here to guide you. Get in touch with us today for personalized advice and ensure compliance with the latest tax regulations.

About the Author

Share

• Link copied to clipboard!
  https://treelife.in/finance/disclosure-of-foreign-assets-in-itr/
  
• 
• 
• 
• 

Rohit Gandhi

Senior Associate | Tax & Regulatory | rohit.g@treelife.in

Specializes in financial due diligence, valuations, business structuring, and income tax advisory. Contributes to the Financial Advisory team by helping startups and businesses make informed strategic decisions.