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Under the Income-tax Act, 1961, it is mandatory for Resident and Ordinarily Resident (ROR) taxpayers to disclose their foreign assets and income in the Income Tax Return (ITR).
ITR-2, ITR-3, ITR-5, and ITR-6 contain Schedule FA for foreign assets disclosure.
Income Tax Return 2025: With increasing globalisation, many Indian residents hold assets outside India, such as bank accounts, foreign equities, immovable properties, or interests in overseas entities. Under the Income-tax Act, 1961, it is mandatory for Resident and Ordinarily Resident (ROR) taxpayers to disclose their foreign assets and income in the Income Tax Return (ITR). For AY 2025-26 (FY 2024-25), these disclosures are made in Schedule FA of the ITR.
Who Needs to Report Foreign Assets?
- Resident and Ordinarily Resident (ROR): Mandatory to disclose all foreign assets and income.
- Resident but Not Ordinarily Resident (RNOR) and Non-Resident (NR): Not required to disclose foreign assets, except income received or accrued in India.
Who Is A ‘Resident and Ordinarily Resident’ (ROR) Under Income-tax Act, 1961?
A Resident and Ordinarily Resident (ROR) under the Income-tax Act, 1961 is an individual who qualifies as a resident in India (i.e., stays in India for 182 days or more in the year, or 60 days in the year and 365 days in the preceding 4 years) and additionally has been a resident in at least 2 out of the last 10 years and stayed in India for 730 days or more in the preceding 7 years. An ROR is taxed in India on their global income, i.e., income earned both in India and abroad.
Which ITR Forms Contain Schedule FA?
ITR-2, ITR-3, ITR-5, and ITR-6 include Schedule FA.
ITR-1 (Sahaj) and ITR-4 (Sugam) cannot be used if the assessee has foreign assets.
Categories of Foreign Assets to be Disclosed
As per Schedule FA for AY 2025-26, taxpayers must disclose the following:
- Foreign Depository Accounts – e.g., overseas bank accounts.
- Foreign Custodial Accounts – e.g., accounts holding shares, securities.
- Foreign Equity & Debt Interest – shares, bonds, debentures in overseas entities.
- Foreign Cash Value Insurance / Annuity Contracts.
- Financial Interest in Any Entity – holding shares, voting rights, or partnership interest.
- Immovable Property – foreign residential/commercial property or land.
- Other Capital Assets – paintings, jewellery, vehicles, yachts etc. held abroad.
- Trusts Created Outside India – where taxpayer is settlor, beneficiary, or trustee.
- Any Other Foreign Asset not covered above.
Details Required in Schedule FA
For each asset, the following particulars must be furnished:
- Country name & code.
- Name and address of institution (bank, company, or entity).
- Account number/identification.
- Date of opening/acquisition.
- Peak balance or investment value during the year.
- Closing balance/value as on 31st March 2025.
- Income accrued/earned from such assets.
- Whether income is offered to tax in India (Yes/No).
Important Points to Remember
Income Reporting: Even exempt income (like certain dividends) must be disclosed.
Period Covered: For AY 2025-26, disclosure is for the calendar year ending December 31, 2024, (not FY ending March 31).
Jointly Held Assets: Must be reported even if held jointly with others.
Foreign Bank Accounts Closed: If any account was closed during the year, disclosure is still required.
Double Tax Relief: Income taxed abroad may be eligible for relief under Section 90/91 (DTAA).
Penalties for Non-Disclosure
- Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (BMA):
- Tax @ 30% of value of undisclosed foreign asset, plus penalty equal to 3 times tax.
- Prosecution may extend up to 10 years imprisonment.
- Under the Income-tax Act, penalty for inaccurate filing may also apply.
For AY 2025-26, residents must carefully fill Schedule FA in their ITR to report all foreign assets and related income. Full disclosure not only ensures compliance but also avoids heavy penalties under the Income-tax Act and Black Money Act.
Experts suggest maintaining detailed records of all overseas bank statements, investment reports, and tax returns filed abroad to ensure correct reporting in India.
Income Tax Return Deadline 2025
The income tax return (ITR) filing season is going on, with the due date for non-audit ITRs being September 15, 2025. However, for those requiring audit, the deadline is October 31.
So far, over 3.98 crore ITRs have been filed. Out of this, nearly 3,8 crore returns have been verified. A total of 2.51 crore ITRs have also been processed till August 30, 2025. There are a total of 13,30,60,424 individual registered users on the e-filing portal.
Haris is Deputy News Editor (Business) at news18.com. He writes on various issues related to personal finance, markets, economy and companies. Having over a decade of experience in financial journalism, Haris h…Read More
Haris is Deputy News Editor (Business) at news18.com. He writes on various issues related to personal finance, markets, economy and companies. Having over a decade of experience in financial journalism, Haris h… Read More
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