[Opinion] All About Reporting of Foreign Assets and Income

Prabhakar K S – [2025] 172 taxmann.com 301 (Article)

On November 16, the Central Board of Direct Taxes launched a Compliance-cum-Awareness Campaign for the calendar year 2023 and the relevant Assessment Year was 2024-25. Through this, the Income Tax Department reminded the taxpayers in vide newspaper ads in general and by sending SMS, and e-mail to targeted resident taxpayers identified through information received from foreign tax jurisdictions suggesting that they may hold foreign accounts, assets and income sources. Under this special campaign, 19,501 taxpayers having high significant foreign income as dividend and interest reached out. As a result of persistent push from the Board, over 30,000 taxpayers have declared foreign assets worth over Rs. 29,000 crore and additional overseas income of Rs. 1089.88 crore. Interestingly, 6,734 taxpayers have revised their residential status from ‘resident’ to ‘non-resident’ and are trying to escape the serious consequences of non-reporting.

Accurately reporting and complying with Schedule Foreign Assets (Schedule FA) and reporting income from foreign sources (Schedule FSI) in Income tax returns is mandatory under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (Black Money Law). Non-compliance will invite stringent penalty provisions and unforeseeable circumstances.

1. What is a foreign asset?

For the black money law, the following are scheduled as foreign assets – foreign assets include foreign bank accounts, foreign depository accounts, foreign equity and debt interest, foreign cash value insurance contracts or annuity contracts, trusts outside India, in which a taxpayer is a trustee, beneficiary or settlor, financial interest in any entity or business, accounts in which a taxpayer is/was having/had signing authority, immovable property outside India, other capital assets outside India, and foreign custodial account.

2. Who is required to report?

A resident taxpayer must mandatorily fill the Schedule FA and Schedule FSI provided in ITR 2 and ITR 3 for the above assets held / income earned at any time during the calendar year 2023. Even if his/her income is below the taxable limit and such assets were acquired from disclosed sources. In other words, only resident taxpayers i.e. who is residing in India for 182 days or more during the previous year; or 60 days or more during the previous year and 365 days or more during the previous four years immediately preceding the relevant previous year are considered as resident in India, is required to report his/her foreign income and assets every year.

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